If there are many suppliers of undifferentiated commodities, market price tends to
A) Favor profit maximization goals
B) Approach marginal cost
C) Higher than in pure competition
D) Increase over time
E) Fluctuate violently

Question

Quizplus · Accepted Answer

In markets with many suppliers of undifferentiated commodities, competition tends to drive prices down to the level of marginal cost, as each supplier seeks to attract customers by lowering prices, and there is little to differentiate products aside from price.

If There Are Many Suppliers of Undifferentiated Commodities, Market Price