In which market form, a firm does not exercise control over price?
Perfect competition
A firm does not exercise control over price in a perfect competition market form. Here's why:
- Perfect competition: In this market, there are many buyers and sellers, and all firms sell identical products. Because no single firm can influence the market price, each one must accept the prevailing market price as given.
- Monopoly: A single firm controls the entire market supply and can set prices to maximize profits.
- Oligopoly: A few firms dominate the market, often leading to strategic pricing decisions and some level of control over market prices.
- Monopolistic competition: Many firms sell similar but not identical products, allowing for some control over pricing due to brand differentiation.
Therefore, only in perfect competition a firm has no control over the price and must act as a price taker.
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