Answer to Question #302466 in Microeconomics for boiza

Question

a)What is market failure? Why do markets fail? Why is market failure common in

developing countries? Discuss.

b) What role do “barriers to entry” play in the Structure-Conduct-Performance theory?

Explain.

c) Based on pros and cons discuss the differences between the three integration models.

d) Discuss the nature of agricultural marketing from the small-scale and commercial

farming perspective and describe advantages and disadvantages that exist in each

case. Provide four types of satisfaction that will occur through the marketing in both

cases of farming

Answer 1

)a) What is market failure? Why do markets fail? Why is market failure common in developingountries? Discuss.

Market failure is an happening where an economy's allocation of resources by free market is not Pareto efficient leading to loss of economic value. Market failure is common in developing countries because there is prevalence of asymmetric information, market externalities, public goods, and concentrated market power.

b) What role do “barriers to entry” play in the Structure-Conduct-Performance theory? Explain.

Barriers to entry in the Structure - Conduct - Performance theory restricts entry of new market participants and prevents competition enduring that those present in the market enjoy good performance. This theory states that market structure in place is a determinant of market conduct and it's performance.

c) Based on pros and cons discuss the differences between the three integration models.

Horizontal integration is when a firm gains control of other firms performing similar functions at the same level in the marketing sequence. Some marketing firms combine to form a union with a view to reducing actual competition in the market.

Vertical integration occurs when a firm performs more than one activity on the sequence of a marketing process and links two or more functions associated with a single firm. It enables control over quality and quantity in production. Can be divided in to forward and backward integration.

Conglomerate integration is where firms that are not related in any way come together under a unified management.

d) Discuss the nature of agricultural marketing from the small-scale and commercial farming perspective and describe advantages and disadvantages that exist in each case. Provide four types of satisfaction that will occur through the marketing in both cases of farming

Agricultural marketing involves the operations involved in moving goods and raw materials from field to the final consumer, for instance, handling products at firm, processing, grading and packing. Small scale farming do not fully employ complex agricultural marketing as they produce or handle little products. The advantage for small scale farmer is that, they won't spend much money in the process and disadvantage is, new small scale farmers might find it a challenge to adopt it. It creates means to raise money, sell shares of a harvest, to market produce directly to people around the country, and improve the livelihoods of farmers and small business owners while fortifying the entire food supply chains.