Answer to Question #208730 in Microeconomics for Nikk

Question

https://www.google.com/amp/s/slate.com/human-interest/2014/03/meat-racket-excerpt-how-tyson-keeps-chicken-prices-high.amp

Questions on Case Study 2 (10 marks) 

1. Describe the type of market structure mentioned in the above article and discuss its features. (5 marks) 

2. Elaborate on how consumers are affected by the actions undertaken by these firms in the industry as described in the case study. Provide a local example if applicable to this scenario. (5 marks)  

The link which I provided is the case study. Please answer the questions by reading the case study through the link. Access case study from the link please. Thank you!

Answer 1

The type of market structure discussed is monopolistic competition. Every company produce similar products, chicken meat, that is homogeneous, however . The quality of chicken tend to vary from supplier to supplier, hence they are substitutes for each other. Buyers are thoroughly familiar with the quality and nature of the chicken sold to them and fully familiarize the fees charged by every seller.

Features of monopolistic competition

I)Many sellers and buyers within the industry

ii) Every firm makes same product.

iii) Sellers and buyers have access to the perfect information regarding price.

iv) The entities usually avail differentiated product but similar alternatives. Such markets need to be easy relatively, their prices need to be quite close.

However, the features tend to relate with perfect competition at some point, therefore it cannot be much accurate regarding the structure.

2.)

Considering the decision to increase prices, consumers tend to be adversely affected since other amount of money that may be used in other programs will be used to meet the budget for buying chicken meat. For the consumers used to pruchasing on daily basis, they will be highly exploited as they are not privileged to control the market.