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Price Takers and Price Makers

Level:
A-Level, IB Diploma
Board:
AQA, Edexcel, Eduqas, IB, OCR, WJEC

Last updated 27 Sept 2020

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

Price Takers and Price Makers

Price-taking and the average revenue curve in perfect competition

The average revenue curve is the price that the price-taking perfectly competitive firm charges. As the firm is tiny compared to the overall output of the market, the firm cannot influence the market price in any way. It can choose to sell as much as it likes at the going market price but finds there is no market for its homogenous output at a higher price.

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