Product differentiation exists within an industry when
A)there are no substitutes for the product.
B)the firm can sell all it wants at the given price.
C)the market is a monopoly.
D)the market is perfectly competitive.
E)there are close but not perfect substitutes for the product.

Question

Quizplus · Accepted Answer

Product differentiation exists when there are close but not perfect substitutes for the product. This means that consumers have options within the market and are able to choose between different products based on certain characteristics, such as price, quality, or features. In a perfectly competitive market, there is no product differentiation as all firms sell the same product at the same price, and in a monopoly market, there are no substitutes for the product. If a firm can sell all it wants at the given price, it may be an indication of high demand, but it does not necessarily imply product differentiation.

Product Differentiation Exists Within an Industry When