Demand and Supply & Perfect Competition - Assignment Example

The food vending business in Amsterdam is on the rise and is an example of a perfect competitive industry. Several food vendors are under the same roof selling a variety of products ranging from Mumbai street food to hot dogs that are sold in pretzel buns. The idea of the owner of the food vending stalls was to involve original ideas of Amsterdam locals without including common franchisers such as KFC and McDonalds in the industry. It is reported that the food vending hall had only been open for two weeks and buyers had been flocking into it without restriction.

The food vending industry in Amsterdam is an almost perfect competition industry. In the article, food vending industry is vast and has diverse products that are supplied every morning to be produced under cheap and affordable circumstances. One of the factors that make street food vending industry a perfect competitive market is the ease in entry into the field. As explained by Draper (1996), most street food vending businesses require small scale operations, use of traditional food processing methods and low capital costs to start.

Secondly, there are no set restrictions in order to start selling in the market. As explained by the owner of the food mall, the only restrain was set for food chains such as MacDonald’s but local food vendors were accepted. This restriction denotes that the food vending industry in the food hall was not purely a perfect competitive market. Thirdly, products sold by food vendors are standardised and homogeneous. The sandwiches, soups, hams, burgers, vegetables and other street foods that are sold in the food hall are foods that are known and standard.

Therefore, the food products sold from the fresh produce received every morning are standardized and this makes the food vending industry in Amsterdam perfect competition market. The price of the goods cannot be changed by the seller but depend on the availability of