(a) 1992 Ford Escort(b) 100 shares of General Motors common stock (c) Panasonic 19-inch color TV(d) an apartment full of furniture(e) a silo full of corn.Please explain your answer
Seller's in a perfectly competitive industry are price takers, such as agriculture. A silo full of corn is the only perfectly competitive market good in this case. When you buy corn do you ask yourself what brand the corn is? Typically, there are many producers of the same good therefore one producer cannot effect the price of the good. So the corn farmer is the price taker. The other goods have subsitutes. An apartment full of furniture is priced based on size and location. The pricing is changed on every unit.Unlike corn which every ear of corn is the same. A Panasonic TV has many sizes including 19''. The prices will vary with every TV, plus there is the ability to buy a subsitute such as Visio or Sony. The the Panasonic is priced agianst other sizes and brands. Again, what is the subusitute to corn? Either you eat corn or not. 100 shares of GM stock is tricky. The seller is a price taker based on the market price of the stock and pricing usually does't depend on the price of other stocks. 1992 Ford Escort. The price is based on the condition of the car based on a book value. And the seller would have to price according to other vehicled for sale. 1992 Ford Escorts are not homogenous so the seller is not a price taker. Remeber cars prices are negotiated or OBO. The seller does not have to sell at any given price.
a) No, the seller will set the price. There aren't many 1992 Ford Escorts for sale, and each will have different mileage and dents and stratches. b) They are all the same (homogeneous) and have a market (stock exchange). The seller will be a price taker. c) The seller is likely to be a price taker (as long as there are plenty of sellers in the market - competition) as the product is uniform for all sellers. d) This is a little unclear. The seller will have to deal with the going rate for an apartment on the property market. The seller may be able to influence the price somewhat by improving to a quality better than other apartments. e) There is a market for agricultural products and a silo of corn is more or less homogeneous. The seller will likely be a price taker.
