Question

why markets represent price makers and which markets are pricetakers?

Answer 1

Price Maker Firms means the firms which influence the market and decides their own price rather than taking the a common market price.

Here the Marginal Revenue (MR) curve is below the Average Reveue(AR) curve or Demand curve. So the price is determined by Demand curve which can be different for different firms hence, Price maker.

Examples : Monopoly Market, Oligopoly Market

Price Taker are firms which take a common price as given by market equilibrium of supply and demand. All the firms in the market takes this common price.

Here the MR curve is same as AR curve or Demand curve. So the prices are same for all and hence, Price taker.

Example : Perfectly Competitive Market

P = MR = AR =D M 2 \AR=D PRICE TAKERS PRICE MAKERS