Which of the following is a consequence of competition?
A)An unrelenting squeeze on prices and profit.
B)Positive economic profit in the long run.
C)Elimination of the most efficient firms.
D)Price-gouging behavior.

Question

Quizplus · Accepted Answer

Competition leads to an unrelenting squeeze on prices and profit as firms try to undercut each other to attract customers. This can result in lower profit margins for firms and sometimes even losses. Options B, C, and D are not a necessary consequence of competition. Positive economic profit in the long run only occurs if a firm has a sustainable competitive advantage, elimination of the most efficient firms could happen but is not a necessary consequence, and price-gouging behavior is typically associated with monopolies or oligopolies, not competitive markets.

Which of the Following Is a Consequence of Competition