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Under perfect competition, the seller is price taker, under monopoly he is the price maker. Explain. |
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Answer» Under perfect competition, the price is determined by the industry. It is due to the fact that there are large number of buyers and sellers of homogeneous products under perfect competition. No single seller by changing his supply can influence the Price. A monopolist is the only seller and himself determines price of his product. He is a price maker. There is no challenge to his price decisions as there are no competitive firms in the market and there are no close substitutes of his product. Barriers to the entry of new firms further strengthens his position as a price maker. |
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