Question

For the firm below, give a classification of which market structure it most accurately fits. Briefly justify your classification using at least two relevant characteristics of the market structure. Multiple answers may be accepted based on the justification. However, you must justify your classification by connecitng the characteristics to the specific business.
Small-scale com farmer

Answer 1

Answer: Perfect competition

Explanation:

The market structure for a small scale corn farmer is perfect competition. The characteristics of perfect competition include:

1. Large Number of Sellers and Buyers: In a perfect competition, there are large number of buyers and sellers in the market. Producers are price takers and the seller cannot influence the price. There are numerous people on the market that sells corn and no seller can influence price.

2. Homogenous Products: The products are identical. Corn looks thesame and cannot be differentiated.

3. Perfect information. There is perfect information about the prices of products and other necessary information regarding the products. There's a perfect information regarding the corns that are sold.

(4) Free entry and exit: There's free entry and exit as new sellers are free to come into the market. There's no obstacle in the market.