Sir Shannon Scott Williams
January 17th, 2010
Unit 3: Discussion Board
Production And Perfect Competition
When I think of perfect competition, I think of something similar to a monopoly, however the difference is that a perfect competition is a market in which all other participating markets are price-takers, (Krugan, Wells, 2009, p. 330). In USA, the government tends to put limits on monopolies, but most obstacles for perfect competitions are left out, (Krugan, Wells, 2009, p. 331). Choosing a perfect competition should be the matter of what is the first line of a production (eg. steel used to make automobiles).
To my knowledge for the local area, there is a chicken farm named Kagel’s Chicken Farm. Factors that help support Kagel’s are that there are several different types of buyers and sellers for whole chickens, eggs, and fertilizer. Buyers would be slaughterhouses for live chickens, food stores for eggs, and those in need of fertilizer. Sellers, like Kagel’s, would be those limited to chicken farming.
Being that Kagel’s is a base supplier, this makes it a price-taker giving it the advantage to alter production without heavily affecting the market price for its products, also known as a standardized product. Kagel’s and other chicken farmers sell their products at market price, a base price that is offered in the marketplace. Perfect competitions, like Kagel’s, cannot change prices based on their production due to the ease of entry and exit for farming. Due to this, governments do place regulations for safety. The regulations include: all poultry establishments develop and implement a written sanitation standard operating procedures (SSOPs), requires all meat and poultry establishments to develop and implement a HACCP program, (Economic Research Service, 2009). Other regulations are more specific to slaughterhouse industries.
In conclusion, the perfect competitive market is narrowed down to the beginning of what a product could be. The competitors for perfect competition are limited to those willing to participate. In the case for Kagel’s, and others alike, their supply must weigh a certain amount before being sold. Kagel’s products are sold at market price. Consumers who wish to purchase products from Kagel’s are those of the slaughterhouse industry which supply uncooked or pre-cooked chickens to their consumers. Other consumers are food stores interested in the eggs which the chickens produce. Also, there are consumers for fertilizer which is produced from chicken manure. In order for Kagel’s to enter and remain in business, they must meet government safety standards. In the real world, Kagel’s has the advantages of their consumers due to the great demand from each industry. If one industry decrease demand for a product, Kagel’s still has the opportunity to deliver to another industry.
Armstrong, Kotler. (2009). Introduction to Marketing (9th Ed.).
Economic Research Services. (2009). “All poultry establishments develop and implement a written sanitation standard operating procedures (SSOPs), requires all meat and poultry establishments to develop and implement a HACCP program”. Ers.Usda.Gov
Retrieved 1.18.2011, from, http://www.ers.usda.gov/briefing/foodsafety/private.htm
Monday, February 7, 2011 // Labels: economics, part 1, perfect competition, production // 17 comments //
17 comments to "Production and Perfect Competition pt 1"
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