Corn farmers Essay Example | Topics and Well Written Essays - 500 words

Corn farmers - Essay Example As per the law of demand and supply of economics, lesser demand of corn will push the price of corn down ward to an extent so that equilibrium in demand and supply reaches. Individual corn farmers will thus face the state of lesser demands then previously what they had catered to. The market of corn can be assumed as perfectly competitive for the following reasons. 1. There are large producers and suppliers of corn in the market. It means that each producer is too small compared to the entire market to influence price by its own supply. 2. Corn Market has bountiful suppliers with standardized products. Buyers perceive them all identical. 3. Buyers have perfect information available about the prices of corn producers. 4. There are no entry or exit barriers for the firms in the long run; market is always open for competition for new suppliers. 5. The market is said to have reached in long run equilibrium by 2014 and in a perfectly competitive state as the marginal firm makes a normal p rofit in the long run. Since market of corn is nearly perfectly competitive, any reduction in demand or increase in its supply will push the price down ward so as to find a new equilibrium of demand and supply during 2016 and beyond. (Kindly refer Appendix I) Above happening is bounded by certain assumptions, which are enumerated as per the following. a.