Discussing how Businesses Set Prices and Accept Prices in the Market

Cost information is important information that helps managers set prices and make product structure decisions. How managers use cost information in making these decisions depends on whether the business is large or small in the manufacturing industry. If businesses have a large market share and exercise leadership in the industry, businesses can determine the prices for their products. These businesses are price setters. If prices are set by one or more large enterprises at the head of an industry, then a small enterprise must bear the prices set by the large enterprises in the industry. In such a situation, small businesses are price takers and the business chooses to structure its products according to predetermined market prices for its products.