The Australian Agriculture Company - Agribusiness

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             Fig. 1.1: A Perfect Competition Curve.
             (Asmundson, 2012).
             The market current market is an elastic one. According to Fig. 1.1, a change in the price of the commodities such as meat, sorghum, wheat, cotton and other products results in an equivalent increase in the products' supply. On the contrary, an increase in the supply of these commodities will reduce the overall supply of meat, cattle and other agricultural products. Given the fact that there are many players in the industry, the agribusiness industry's perfect elasticity will depend on the average price of the commodities. At the same time, AA Co is a limited likelihood to mark-up its price above the marginal cost for fear of losing its market share. Ultimately, the competition between AA Co and other companies implies that the company's products barely surpass the marginal costs. However, market forces also affect the pricing thereby making it possible for AA Co to mark-up its price above the marginal cost. For example, the recent increase in the demand for beef has led to a significant increase in the price of AA Co's meat prices (Zonca, 2015). Therefore, AA Co operates in a perfect competition market. .
             Production Costs and Scale.
             The company's operation is large scale because it operates on a competitive environment. The large-scale business is good because it is meant to benefit from the economies of scale especially in Australia where much of the land is semi-arid (Stewart & Kragt, 2015). The company's operations depend on fixed and variable factors of production. .
             Fixed Factors of Production.
             Properties.
             The company's operation is based on several fixed factors of production. Land and other properties are AA Co's major fixed assets. The company has in excess of seven million hectares of land in Queensland as well as in the Northern Territory. The land is primarily used for growing crops, hay production, as a pastureland. Much of the land is irrigated during the dry season to yield adequate pasture for the animals because the beef cattle are mainly grass-fed.