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The market for iron is perfectly competitive and all existing producers and potential entrants are identical....

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Economics

The market for iron is perfectly competitive and all existingproducers and potential entrants are identical. Consider thefollowing information about the price of iron.

Between 2000 and 2005, the market price was stable at$2/pound.

In the first three months of 2006, the market price doubledreaching $4/pound, where it stayed for the remainder of 2006.

Throughout 2007 and 2008, the price declined, eventuallyreaching $2/pound by the end of 2008. Between 2008 and 2012, theprice remained stable at $2/pound.

Assume that technology has not changed and that input priceshave remained constant over the period. Using ONLY words, explainthis pricing pattern over the period.

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