In a perfectly competitive market, firms are considered price-takers due to several key factors.
Firstly, no individual firm in a perfectly competitive market has the ability to change the market price. Each firm's output is small relative to the total market output, making it insufficient to have any significant influence on the prevailing price. Consequently, firms must accept the market price as determined by the overall market conditions.
Secondly, the demand for products in a perfectly competitive market is perfectly elastic. This means that consumers perceive all the products in the market as homogeneous or perfect substitutes for each other. As a result, if a firm raises its price even slightly above the prevailing market price, it will lose all its customers. Consumers have perfect information about the market and will choose to purchase from firms offering the same product at the prevailing market price. Therefore, firms in a perfectly competitive market have no incentive to deviate from the market price.
Lastly, the presence of perfect information ensures that consumers are aware of all available options in the market. If one firm attempts to charge a higher price, consumers will not be willing to pay it, as they can easily find alternative suppliers offering the same product at the market price. This further reinforces the firms' position as price-takers, as they have no ability to charge a higher price without losing all their customers.
In summary, firms in a perfectly competitive market are price-takers because they lack the individual market power to influence prices. The perfect substitutability of products, along with perfect information and the small size of each firm's output relative to the total market, ensures that firms must accept the prevailing market price as determined by supply and demand dynamics.