Chapter 9, Problem 11AA

To determine

To state: Control a single seller exerts on the market price in a perfect competition market.

Answer to Problem 11AA

In a perfect competition, seller does not exert any influence on the market price

Explanation of Solution

In a perfect competition market, sellers are price takers which means they have to accept the prices determined by the market forces to sell their products and allied services.

Since there are large number of buyers and sellers in a perfect market, any slight change in the price by the sellers will result in them losing customers and will negatively impact their sales.

Therefore, it is nearly impossible for sellers to exert any influence on the market prices in a perfect competition market. The demand and supply of the products and services determine the market price.

Economics Concept Introduction

Introduction: In a perfect competition market, sellers are price takers and not price makers.