Definition
- Price taker
- A price taker is a firm that the pressure of competing firms forces to accept the prevailing equilibrium price in the market.
- Not to be confused with: Perfect competition
- Perfect competition is a market where many firms sell identical products to many buyers, everyone has all relevant information, and firms can enter and leave freely.
Test yourself
What is the difference between price taker and perfect competition?
Perfect competition is the market structure; a price taker is how each firm in it behaves.