no participant sets the price in a competitive market.
no participant sets the price in a competitive market.
who sets the price in a competitive market?
no participant
Na
Na
according to classical and neo classical economic thought, firms in a perfectly competitive market are price takers because no firm can charge a price that is different from the equilibrium price set within the entire industry's perfectly competitive market. since a competitive market has many competing firms, a customer can just easily buy widgets from any of the competing firms. competing firms in a market essentially (each) face its own "horizontal" demand curve that is fixed at a single price established by market equilibrium for the entire industry as a whole. each firm in a competitive market will have buyers for its product as long as the firm charges 'no more than' the 1 single price. since firms cannot control the activities of other firms that produce the same widget sold within the market, a firm that charges a price that is higher than the industry's market equilibrium price would lose "all" business as customers would simply respond by buying their widgets from other competing firms that charge the (lower) market equilibrium price. . this makes deviation from the market equilibrium price impossible.
monopoly profit