Is the agricultural industry perfectly competitive? Use economic rationale to explain why or why not?
Perfect competition is a form of market in which no producer or consumer has the power to influence prices in the market. The study of perfect competition lays a basic foundation for theory of demand and supply.
First, let's examine the economic factors that must be present in an industry with perfect competition:
1. Firms sell homogenous product. There is no product differentiation.
2. No firm can influence the price in the market. All firms are price-takers.
3. Market share of each firm is relatively smaller as compared to market size.
4. There is perfect information in the market, Buyers and sellers are well aware of products and prices charged by ...
Solution describes the various aspects of perfectly competitive market and discusses whether agricultural industry can be treated as perfectly competitive industry or not. Answer is typed in about 425 words.