Explain why the market for soybeans is perfectly competitive, with thousands of soybean farmers, while the...

Explain why the market for soybeans is perfectly competitive, with thousands of soybean farmers, while the market for computer processor chips is dominated by a few large firms.

Expert Solution

The market for soyabeans is an agricultural market and most of them are perfectly competitive as it consists of thousands of soyabean farmers.
Due to large number of producers, this market allows free entry and exit of other producer's into the market and no one firm can influence the whole market or set the market price. Hence each of them are price taker's.
The price set by these firms in the agricultural market depends only upon the quantity demanded and supplied in their firm's.
The market for computer process chips are dominated by a few large firms and hence they are said to belong to a oligopolistic market.
Each processor chip producing firm in an oligopoly have their own market structure which may or may not be superior than the other dominant firm. They compete among themselves or sometimes join together to make more profits and share them among themselves. This collusion Increases the prices for customers.

Rahul Sunny answered 1 year ago

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