Question

Ulla is a farmer who farms in California's Central Valley where water usage is being restricted due to prolonged drought. She sells sugar beets to buyers throughout the United States. Ulla is familiar with the economics of perfect competition. How is the price at which she sells her sugar beets determined?

Answer 1

Answer:

The market price is determined by the combined actions of both the buyers and sellers

Explanation:

In other words, the market price is determined by the clash of supply and demand, which are the two basic economic determinants. Although Ulla is affected by a drought, she knows she cannot raise the sugar beet price, as her competitors would beat her. On the other hand, they could increase the price if all of the beet sellers throughout the US were affected by a drought.