The term price taker can apply to buyers as well as sellers. A price-taking buyer cannot influence prices by changing the amount purchased.

Are you a price taker for the goods you buy?

Can you give an example of a firm that might not be a price taker in the market in which it buys one or more of its inputs?

Question

Business

Dashawn Villegas

22 June, 15:13

The term price taker can apply to buyers as well as sellers. A price-taking buyer cannot influence prices by changing the amount purchased.

Are you a price taker for the goods you buy?

Can you give an example of a firm that might not be a price taker in the market in which it buys one or more of its inputs?

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Answers (1)

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Santos Gentry · Answer 1

'Price taking' buyers : comprise an insignificant part of the market demand. I might or might not be a price taker, depending on nature of my demand. Monopsony is not a price taker.

Explanation:

A seller or buyer being 'Price Taker' implies : they contribute insignificantly to market supply or market demand, & hence their supply or demand change won't alter the market prices. Eg Perfect Competition.

I might or might not be a price taker, depending on nature of my demand. If I am a buyer amidst many other buyers, I would be a price taker. If I am one of the few buyers of a commodity, I might be able to influence price by my demand.

Monopsony is a market situation with single buyer. The buyer can be of certain inputs, labour services. These single buyers have all control on price determination, are not Price Takers - rather Price Makers. Eg : Company Coal town, coal company sole employer of coal labour.