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“A firm under perfect competition is a price taker, whereas a firm under monopoly is a price maker.” Defend or refute the given statement with valid reasons.

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The statement is correct. In the perfect competition market, every firm will only accept the price of the commodity which is determined by the powers of market demand and market supply in the market or industry. The firms are adopting the dependent price policy, because they are producing a very minute fraction of the total supply of the market. They have no control over the prices. No firm can adopt its independent price policy. The firm will only adjust its production according to prices of the market. None of the firm is ready to sale the product below this price and none of the buyer is ready to pay more than this price. 

Whereas, In monopoly market there is only one producer of the commodity, therefore that producer is supplying 100 % of that commodity, means he is controlling the entire supply of the market. Therefore that firm can effect the Price and Supply of the Market . 

The firm adopts independent price policy, firm can increase or decrease the price of its commodity. Firms have full control over the price and therefore it is termed as price maker.

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