Question

Identify a particular industry (non-government) that meets the criteria for Pure Competition or Monopoly. Explain clearly why you think the industry is in Pure Competition or is a Monopoly and evaluate it from perspectives of efficiency and equity. You may post to both categories, but are required to only select one. Keep in mind there are four market structures and we study Monopolistic Competition and Oligopoly next week. Read the Discussion Instructions for Week 4 and identify the market characteristics, productive efficiency, allocative efficiency, and equity in the particular industry that you selected.

Answer 1

Let's choose Pure Competition.

A pure competitive market is always economically efficient, because each company produces at lowest average total cost and thus achieves productivity efficiency and allocative efficiency when the cost is equal to the lowest price on a fully competitive market.

A meat market could be a prime example. At the market, many vendors meet to try and sell the same goods, and many buyers try to buy the same products with good knowledge. There is little to prevent someone from entering or leaving the market.