Final answer:
A fragmented industry is likely to consist of many small firms, which results in highly competitive market conditions. High profitability is less common due to intense competition and small scales of operation.
Step-by-step explanation:
When discussing a fragmented industry, we are typically referring to an industry that consists of many small firms. This characteristic signifies that no single company has a significant market share to exert control over the industry's direction or pricing.
Fragmented industries are marked by an absence of market dominance, unlike what is seen in oligopolies where a few firms hold considerable market power.In fragmented industries, the competition is stiff because there are numerous players, each with a small scale of operation. These firms often compete intensely for market share, making it a highly competitive structure.
Therefore, the statement "It consists of small firms" is likely to be true about a fragmented industry. High profitability is not characteristic of fragmented industries as the intense competition and lack of scale often limit profitability.
Similarly, saying that the industry consists of only a few firms would describe an oligopoly rather than a fragmented market. Lastly, suggesting that the industry has a very low competitive structure would not be accurate, as the abundance of firms usually results in quite the opposite.