An online movie streaming service charges $14.99 per month for its basic package. However, when a competitor introduced the same service at $13.99, the firm dropped its price to $13.99. The firm most likely made this price reduction in an attempt to
A)decrease revenue but increase profit.
B)increase profit by decreasing revenue.
C)maintain market share.
D)decrease market share.
E)increase efficiency.

Question

Quizplus · Accepted Answer

By dropping its price to match its competitor, the firm is attempting to maintain market share and prevent customers from switching to the cheaper competitor. The firm may also be hoping to attract new customers who were previously deterred by the higher price. While there may be some decrease in revenue, the overall goal is to maintain or increase the firm's market position and profitability in the long run.

An Online Movie Streaming Service Charges $14