In a competitive market, who among the following is considered a price taker?

• A. An individual wheat farmer selling in a large national market
• B. A major airline setting ticket prices
• C. A local electricity utility company
• D. A smartphone manufacturer with a unique product

Answer: (A)

Verified step by step guidance

1. Understand the concept of a price taker: In microeconomics, a price taker is a firm or individual who must accept the market price as given because their own transactions are too small to influence the market price.
2. Identify the characteristics of a perfectly competitive market: Many buyers and sellers, homogeneous products, free entry and exit, and perfect information. Firms in such markets are price takers.
3. Analyze each option in the context of price-taking behavior: - An individual wheat farmer sells a standardized product in a large market with many sellers, so they cannot influence the price. - A major airline can influence ticket prices due to market power and product differentiation. - A local electricity utility often has monopoly power and sets prices regulated or otherwise. - A smartphone manufacturer with a unique product has market power and can set prices.
4. Conclude that the individual wheat farmer fits the definition of a price taker because they operate in a competitive market with many sellers and a homogeneous product.
5. Summarize that price takers accept the market price and cannot influence it, which applies to the individual wheat farmer in the large national market.