The small island of Tap, inhabited by the Tapese people, produces a single varie

Question

The small island of Tap, inhabited by the Tapese people, produces a single variety of corn. At the present time, each farmer produces his or her own corn, harvests it and carries it to the market for sale. On any market day in Tap, you will find many different sellers of corn. Competition between the corn sellers is very fierce-as a result, corn prices are quite low. Mega Company, the local beef producer, has announced that it wants to get into the corn business. The president of Mega Company believes that it would be more efficient to bring together all the farmers' corn at one large production facility where quality and packaging can be better controlled. Thus Mega Company acquires a license to enter into the corn industry, and begins buying all the corn from the individual farmers, packaging it, processing it and selling it in the market. The people of Tap are quite happy with the new packaging, and the uniform quality of the corn. However, the Tapese people also notice that the price of corn on the market begins to rise.
Ushing your knowledge of market structures in microeconomics, explain the changes in the corn industry in Tap.
Develop a response that includes examples and evidence to support your ideas, and which clearly communicates the required message to your audience. Organize your response in a clear and logical manner as appropriate for the genre of writing. Use well-structured sentences, audience-appropriate language, and correct conventions of standard American English
  

Explanation / Answer

If we compare the current situation with the previous one we will find a lot of changes.

Consider the previous situation. Here numbers of sellers are huge and they are selleing individually. Hence we can say that there are many sellers and many buyers. this type of market is monopolistic market . In such market prices are generall low.

Now when Mega compan entered into the market, it becomes buyer for all producers and then combined all purchased corn into is own name and then start selling corns as one seller. t hus now situation has changed because noe o final consumers there is only one seller but large number of final consumers still exist. thus now market has changed into monopoly market. And one feature of such market is high price set up by seller. therefore now prices of corn increses.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.