U25292:ECONOMICS ASSIGNMENT SAMPLE 2023
1.0 Introduction
Perfect competition is known as the standard type of the market structure in which the consumers as well as the producers have symmetric information along with the no transaction price. In the perfect competition market a huge amount of consumers as well as producers are competing with each other in this type of environment. It is also known as the opposition market of the monopolistic market. Real markets present outside the plane of a model of market condition and are classified as imperfect.
Imperfect competition is the opposite of the perfect competition. Under this market the reflection of price depends on demand as well as supply of a particular goods. Companies have just gone through such profits which are required to stay in the market.
If the firm wants to earn more benefits in the particular market then the other forms enter on the market and they can drive down the profits of the particular firm. In the study the perfectly competitive market in agricultural fields and the market structure for the agricultural goods and the various key features of competition in short and long run and the parameters of affecting agricultural firms will be discussed in the study.
2.0 competitive market structure for agriculture goods
Agricultural markets are majorly perfectly competitive which means homogeneous products are generated by as well as for many buyers along with the sellers and they are known about the prices. The characters of the market for agricultural goods are the free entry as well as free exit for both the seller and the buyers and it is essential to be the price takers. In this type of the market the large number of sellers on agricultural goods is present with approx.
similar products where they create a situation in which one agricultural firm has the no power for influencing the whole supply which is important enough allowing individual effect which can change in the price level (Hamilton, & Sunding, 2021). On the abstract level it is easier to understand the model of competitive market but the supply curve in which the agricultural products are getting away from the farmer and their method to combine them into the supply curve is very complicated to understand.
Same crops are produced by the different farmers and it is the main reason for the perfect competition and this is also the perfect example of the perfect competition in microeconomics. This is the market structure for the competitive market which is present for agricultural goods.
Figure 1: Perfect competition
(Source: businessjargons.org/perfect-competition.html)
3.0 Key features of competition market in short and long run
There are various key features present in the competitive market for agricultural goods in the short run as well as long run. For the short run the farmers gain the market price which is exactly equal to the marginal cost which they have gone through in the time of the production of agricultural goods. Productivity efficiency is not the features of the short run but for the long run it is the most important key factor for the perfect competitive market.
For the long-run, increase in competition causes the reduction in piece as well as in the cost at which the average cost for the long term procedure is minimum (Itakura, 2020). In this point, the cost is equal to the marginal cost as well as for the total cost of each agricultural commodity.
For the farmers it is the “super normal profit” at the time of short run and in the short-run competitors attract and the price can be fall inevitable as the production of the name crops re occurring through the market but in the long-term procedure the competition is comparative less. There was also another effect present for both the terms in agricultural goods that is economic losses. In this type of losses the firms can exit the market until the equilibrium for the long-term procedure is reached.
4.0 Factors affecting agricultural firm
There are various factors present which have a great impact on the agricultural firms. The factors are discussed in the section. The social as well as the economic factors are labor, capital and competition in the market, advance in technology as well as the different policies of the government for the agricultural goods. Environmental factors also have an effect on agricultural firms (Kumar, & Kant, 2019).
Climate change is the diversity of temperature as well as rainfall and the other environmental factors is the relief that is the impact of lowlands, thinner soil or south facing slopes etc. and the fertility of the soil is also a significant factor for the production of agricultural firms. Apart from that, the most important factors for the agricultural firms are the challenges which come from the global market. The prices fluctuate for the supply price as well as the demand price of different types of food grain in the global market.
5.0 Conclusion
This is the summarization section of the study. The study is about the perfect competitive market for the agricultural good. In the introduction chapter of the study the definition of then perfect competition as well as the different characteristics of the perfect competition is also discussed in the section.
Then the comparison between the perfect competition as well as the imperfect competition is also briefly elaborated in the study. Then the market structure for the agricultural goods is elaborate where the gains of the farmers and the reason behind the perfect competition in the agricultural sectors is stated in that section. The key features for the short run as well as for the long run in the competitive market for agricultural goods are also present.
Then the different key factors that have great influence on agricultural firms are social factors, economical factors like the various governmental policies and marketing competition then the environmental factor as well as the most important factor that is the challenges of global market is clearly illustrated in the study. The study is beneficial to the reader who has the interest on microeconomics.
Reference
Hamilton, S. F., & Sunding, D. L. (2021). Joint Oligopsony‐Oligopoly Power in Food Processing Industries: Application to the us Broiler Industry. American Journal of Agricultural Economics, 103(4), 1398-1413.Retrieved from: https://onlinelibrary.wiley.com/doi/abs/10.1111/ajae.12115 Retrieved on [29.12.2021]
Itakura, K. (2020). Evaluating the impact of the US–China trade war. Asian Economic Policy Review, 15(1), 77-93.Retrieved from: https://onlinelibrary.wiley.com/doi/abs/10.1111/aepr.12286 Retrieved on [29.12.2021]
Kinda, R. S., Zidouemba, P. R., & Ouedraogo, I. M. (2020). How could the Covid-19 pandemic impact the economy of Burkina Faso. Economics Bulletin, 40(3), 2034-2046. Retrieved from: http://www.accessecon.com/Pubs/EB/2020/Volume40/EB-20-V40-I3-P178.pdf Retrieved on [29.12.2021]
Kumar, P., & Kant, S. (2019). Endogenous time preferences of forest goods and community-based forest management. Ecological economics, 163, 205-214.Retrieved from: https://www.sciencedirect.com/science/article/pii/S0921800918313788 Retrieved on [29.12.2021]
Lea, R. (2018). Trading with the EU post-Brexit: the WTO option is perfectly feasible. Arbuthnot Banking Group, 6. Retrieved from: http://www.arbuthnotgroup.com/upload/marketmatter/documents/6_august_2018.pdf Retrieved on [29.12.2021]
Prentice, B. E. (2020). The stability/efficiency regulatory trade-off: policy implications for for-hire trucking. Retrieved from: https://ageconsearch.umn.edu/record/306029/files/agecon-ctrf-0187.pdf Retrieved on [29.12.2021]
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