Question

Owners of coffee plantations in the country of Jabatina grow their own coffee beans and supply them to various stores and restaurants all over the country. There are many plantation owners supplying to a huge number of companies, and they are typically unable to differentiate their products from one another. They also do not have the power to fix their own prices in the industry. In addition, these suppliers can only achieve competitive parity and not a competitive advantage. Thus, the coffee bean industry in Jabatina best illustrates a(n) __ structure
A.) monopolistically competitive
B.) oligopolistic
C.) monopolistic
D.) perfectly competitive

Answer 1

Answer:

The correct answer is letter "D": perfectly competitive.

Explanation:

Perfect Competition is a theoretical structure of the market where competition is at its highest possible level. Perfectly competitive markets have the following characteristics:  

1) All companies sell almost the same product.

2) The companies are all price-takers.  

3) Each company has a relatively small market share.

4) Buyers are given complete product and price information.  

5) Low barriers or no barriers to entering and exiting businesses.

Thus, the coffee bean market in Jabatina is perfectly competitive.

Answer 2

Answer:

"D"

Explanation:

Perfect competition is a market condition involving a large number of buyers and sellers , and similar goods are produced.

The consumers here are well informed about the market and always have access to changes about the market situation.

Decision making can be rational in the interest of both producers and consumers.

There is a tendency for producers to make high profit in the short run , but will always make normal profit in the long run.