When companies that manufacture shipping containers want to buy iron ore, the purchase decision is solely based on price. This is because there are a large number of sellers in the iron ore industry, and iron ore is a highly undifferentiated commodity. Which of the following industry competitive structures does the iron ore industry best illustrate?
A) monopoly
B) oligopoly
C) perfect competition
D) monopolistic competition

Question

Quizplus · Accepted Answer

The iron ore industry best illustrates a perfect competition. A perfectly competitive industry is characterized as fragmented and has many small firms, a commodity product, ease of entry, and little or no ability for each individual firm to raise its prices.

When Companies That Manufacture Shipping Containers Want to Buy Iron