The term refers to a firm operating in a perfectly competitive market that must take the prevailing market price for its product. *

price taker

Explanation:

A perfect competition is characterized by many buyers and sellers of homogenous goods and services. Market prices are set by the forces of demand and supply. There are no barriers to entry or exit of firms into the industry.  

In the long run, firms earn zero economic profit.  If in the short run firms are earning economic profit, in the long run firms would enter into the industry. This would drive economic profit to zero.  

Also, if in the short run, firms are earning economic loss, in the long run, firms would exit the industry until economic profit falls to zero.  

Firms in a perfect competition are price takers. This means that they must accept the prevailing market price.

If a firm decides to set price above market price, it would lose all customers as customers would buy from firms that sell at the market price.

If a firm sells below market price, the firm would incur losses.