price taker

Definition

An individual or company which is not influential enough to affect the price of an item. For example, most investors are price takers, because their individual actions in buying and selling stocks are not enough to change the price of the security. A company is considered to be a price taker if the price it sets and quantity of goods it produces do not have any effect on the market price, and therefore the company is usually forced to go with the market price if they want to sell its goods. An individual consumer is also considered to be a price taker, because the purchases of one consumer do not affect the price a company sets for its products. Companies or individuals can exert varying degrees of influence, so it is not always easy to classify someone as a price taker. opposite of price maker.

Use price taker in a sentence

Normally when a new company enters the market it is considered a price taker because customers may not know about the product. The company must take the market price to become competitive.

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