The Vegetable Valley

Cameron Highlands, which is located on the north-east side of Pahang state, is known to all Malaysians as the Vegetable Valley of the country. Most farmers in this valley practise smallholding farming and they sell a small fraction of the total vegetables produced. The main product of this valley is tomatoes, which is meant for export. The tomatoes grown by the farmers are normally the same and there are no barriers to a new firm of farmer entering the tomato market by purchasing land and planting tomatoes. Since there are many farmers and firms selling tomatoes, this keeps the price stable.

Question:

1. Identify the type of market structure that each tomato firm belongs to. Justify your answer.

1. List two characteristics of the firm in the market structure as mentioned in the article.

1. What type of profit do you think each firm may enjoy in the long run? Give reasons.

1. Suggest two ways how the farmers in this valley can increase the supply of tomatoes.