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Exploring Economics 7th Edition

Exploring Economics (7th Edition)

Book Edition7th Edition
PublisherCengage Learning
Section 12.1: A Perfectly Competitive Market
In Text Question
Figure Question
Section 12.2: An Individual Price Taker's Demand Curve
Section 12.3: Profit Maximization
In Text Question
Section 12.5: Long-Run Equilibrium
In Text Question
Figure Question
Section 12.6: Long-Run Supply
In Text Question
Chapter 12, Section 12.1, In Text Question, Exercise 01
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Why do they call firms in a perfectly competitive market price takers?


  • If a firm in a perfectly competitive market raises the price of its product by so much as a penny, it will lose all of its sales to competitors.
  • Many firms sell the same product in a perfectly competitive market hence there is nothing that makes a product better than the product of other firms.
  • All the buyers of the product know the price they must pay. 


  • A perfectly competitive firm is known as a price taker because the pressure of competing firms forces them to accept the prevail equilibrium price in the market.
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