Chapter 10 Pure Competition Is farming perfectly competitive? Consider whether the US farming industry is perfectly...

Chapter 10 Pure Competition

Is farming perfectly competitive? Consider whether the US farming industry is perfectly competitive. Go to the US Department of Agriculture's Economic Research Service website (http://www.ers.usda.gov/Emphases/Competitive/ (Links to an external site.)), consider the information in the articles on family farms. Does farming in the US have the characteristics of perfect competition? Discuss and use examples to support your argument.

Solutions

Expert Solution

PERFECTLY COMPETITIVE: It is a kind of situation in which we have large number of buyers and sellers and also the product is identical ie same.

Yes , we can say that the farming is perfectly competitive as there are large number of farmers who are growing same crop and also there are large number of buyers to buy those crops.

Yes Farming in US have the characteristics of perfect competition.

CHARACRTERISTICS:

1. LARGE BUYERS AND LARGE SELLERS: In the farming sector there are large number of farmers selling same product.

For eg, There are 10 farmers growing barley in the field , here the there are 10 farmers and same crop is beig grown also the number of people buying it is very large.

2.HOMOGENEOUS PRODUCT: It means the product is same.

For eg, There are 10 farmers growing apples, thus the product is same as everyone is growing the same crop .

3.PERFECT KNOWLEDGE: In this case all the buyers and sellers are well aware of the prices prevailing in the market as every seller will be selling at almost same price.

For eg, There are 10 farmers growing barley, the price of every farmer will be nearly same and if there is difference it would hardly matter as the difference will be very little.

4. INDEPENDENT: Each and every firm is independent and there is no kind of agreement between the 2 firms.

For eg: Here the farmers are totally independent and do not rely on anyone for anything.

Rahul Sunny answered 1 year ago

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