1. In each of the following situations, do you think the industry described will be perfectly competitive or not? Explain your answer.
There are two producers of aluminum in the world, a good sold in many places.
With only two producers in the world, each producer will represent a sizable share of the market. So the industry will not be perfectly competitive.
The price of natural gas is determined by global supply and demand. A small share of that global supply is produced by a handful of companies located in the North Sea.
Because each producer of natural gas from the North Sea has only a small market share of total world supply of natural gas, and since natural gas is a standardized product, the natural gas industry will be perfectly competitive.
Dozens of designers sell high-fashion clothes. Each designer has a distinctive style and a loyal clientele.
Because each designer has a distinctive style, highfashion clothes are not a standardized product. So the industry will not be perfectly competitive.
There are many baseball teams in the United States, one or two in each major city and each selling tickets to its hometown events.
The market described here is the market in each city for tickets to baseball games. Since there are only one or two teams in each major city, each team will represent a sizable share of the market. So the industry will not be perfectly competitive.