Google
Friday 
December 1, 2023 

AmosWEB means Economics with a Touch of Whimsy!

AmosWEBWEB*pediaGLOSS*aramaECON*worldCLASS*portalQUIZ*tasticPED GuideXtra CrediteTutorA*PLS
AD VALOREM TARIFF: A tax on imports that is specified as a percentage of the value of the good or service being taxed. This is one form of trade barrier that's intended to restrict imports into a country. Unlike nontariff barriers and quotas, which increase prices and thus revenue received by domestic producers, an 'ad valorem tariff' generates revenue for the government. For example: a 15 percent ad valorem tariff on a TV set worth $100 would pay a tariff of $15. One advantage of an ad valorem tariff is that it keeps up with changes in prices (mostly inflation).

Visit the GLOSS*arama


PRICE MAKER:

A buyer or seller that possess sufficient market control to affect the price of the good. From the selling side of the market, a monopoly is the best example of a price maker. From the buying side of the market, a monopsony is also a price maker. This is one of two alternatives related to control over price. The other is price taker. Price maker is also termed price setter.
Market control is what enables a buyer or seller to be a price maker. A buyer with market control faces a negatively-sloped demand curve and can select any price-quantity combination on the curve. A seller with market control faces a positively-sloped supply curve and can select any price-quantity combination on that curve.

From the selling side of the market, monopoly exemplifies a price maker. As the only seller in the market, a monopoly firm has the ability to control the price. Firms operating under oligopoly and monopolistic competition are also price makers, although to a lesser degree, depending on their relative market control.

From the buying side of the market, monopsony exemplifies a price maker. As the only buyer in the market, a monopsony firm is able to control the price. Firms operating under oligopsony and monopsonistic competition are price makers, but also to a lesser degree.

While a price maker is able to control the price, it does not have COMPLETE control over the market. A buyer or seller cannot set ANY price for ANY quantity. Price makers on the selling side of the market (monopoly, oligopoly, and monopolistic competition) are constrained by the demand side. A monopoly seller, for example, is constrained by the demand curve it faces. It can establish EITHER the price OR the quantity, but not both. If the monopoly seller establishes a particular price, then buyers decide the quantity that they are willing and able to purchase as reflected by the demand curve. If the monopoly seller establishes a particular quantity, then buyers decide the price that they are willing and able to pay.

Alternatively, price makers on the buying side of the market (monopsony, oligopsony, and monopsonistic competition) are constrained by the supply side. A monopsony buyer, for example, is constrained by the supply curve. It too can establish EITHER the price OR the quantity, but not both. If the monopsony buyer establishes a particular price, then sellers decide the quantity that they are willing and able to offer for sale as reflected by the supply curve. If the monopsony buyer establishes a particular quantity, then sellers decide the price that they are willing and able to accept.

Price makers have market control and face demand or supply curves that are NOT perfectly elastic. For this reason they do not efficiently allocate resources. Price makers do NOT generate an allocation of resources such that the value of goods produced is equal to the value of goods not produced.

<= PRICE LEVELPRICE RATIONING =>


Recommended Citation:

PRICE MAKER, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2023. [Accessed: December 1, 2023].


Check Out These Related Terms...

     | market control | price taker | market structures | market structure continuum | perfect competition | monopoly | oligopoly | monopolistic competition | monopsony | oligopsony | monopsonistic competition |


Or For A Little Background...

     | firm | industry | business | market | efficiency | demand | supply | competition among the few | competition among the many | demand price | supply price |


And For Further Study...

     | bilateral monopoly | duopoly | imperfect competition | perfect competition, efficiency | perfect competition, characteristics | monopoly, efficiency | monopoly, characteristics | monopolistic competition, efficiency | monopolistic competition, characteristics | collusion, efficiency | oligopoly, characteristics |


Search Again?

Back to the WEB*pedia


APLS

YELLOW CHIPPEROON
[What's This?]

Today, you are likely to spend a great deal of time at a flea market wanting to buy either a graduation present for your niece or nephew or a toaster oven that has convection cooking. Be on the lookout for jovial bank tellers.
Your Complete Scope

This isn't me! What am I?

The 22.6% decline in stock prices on October 19, 1987 was larger than the infamous 12.8% decline on October 29, 1929.
"Sometimes our light goes out, but is blown into flame by another human being. Each of us owes deepest thanks to those who have rekindled this light. "

-- Albert Schweitzer, missionary physician

LIFO
Last In First Out
A PEDestrian's Guide
Xtra Credit
Tell us what you think about AmosWEB. Like what you see? Have suggestions for improvements? Let us know. Click the User Feedback link.

User Feedback



| AmosWEB | WEB*pedia | GLOSS*arama | ECON*world | CLASS*portal | QUIZ*tastic | PED Guide | Xtra Credit | eTutor | A*PLS |
| About Us | Terms of Use | Privacy Statement |

Thanks for visiting AmosWEB
Copyright ©2000-2023 AmosWEB*LLC
Send comments or questions to: WebMaster