Question

2. Consider the market for pick-your-own (or cut-your-own) Christmas trees. Customers drive to a nearby Christmas tree farm to select and pick or cut a Christmas tree. Describe the characteristics of this industry by completing the following table. For example, against the characteristic "number of firms”, enter your best guess about whether the number of sellers in this industry is relatively small or large for a given geographical market, along with a brief explanation of your answer. Characteristic Pick-your-own Christmas trees 1. Number of firms 2. Type of product 3. Control over price 4. Ease of entry and exit 5. Non-price competition 6. Based on your answers to parts 1 to 5, what's your conclusion about the market model in this industry?

Answer 1

Characteristics	Pick your own Christmas Trees
1. Number of firms	Large As the product Christmas tree farm is easy to manage and not much time consuming so many sellers are there.
2. Type of Product	Homogeneous As the Christmas trees are all similar in nature, so the product is homogeneous.
3. Control over price	Price taker As there are manys sellers in the market with homogeneous product so the sellers take the price decided by the market.
4. Ease of Entry and Exit	Easy As the government doesnt have any control, so the entry and exit is easy for the sellers.
5. Non price competition	No Product is homogeneous, so the competition is only on the price based.
6. Based on your answers to parts 1 to 5, what's your conclusion about the market model in this industry	As per the answers, the market model in this industry is Perfect competition. The sellers are competing perfectly with each other.