n NISM Certifications
XV NISM Series XV
Medium

Why are most businesses price takers rather than price makers? In highly competitive markets, companies cannot independently set prices because competitors’ pricing dictates market conditions. Businesses must align their prices with the market to maintain competitiveness, leaving them as price takers.

Practice question from NISM XV Mock Test 2 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Low sales margins

  2. B

    Low bargaining power with suppliers

  3. Prices set according to market competition

    Correct answer

  4. D

    Low manufacturing cost

Why this is the answer

In competitive industries, companies lack pricing power. If one competitor lowers prices, others must follow to remain competitive, making them price takers rather than price makers.

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