Study notes

Price Takers and Price Makers

  • Levels: A Level, IB
  • Exam boards: AQA, Edexcel, OCR, IB, Pre-U, Eduqas, WJEC

This is a short revision note on price takers and price makers and the consequences for average and marginal revenue in each situation.

Price takers

  • Price takers accept the ruling market price and sell each unit at the same price. AR=MR. We find price takers in perfectly competitive markets.

Price makers

  • Price makers are found in imperfectly competitive markets such as Monopoly & Oligopoly
  • Price makers have some pricing power and will face a downward sloping AR curve

Average and marginal revenue curves for price takers and price makers

Average and marginal revenue curves for price takers and price makers
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