A market's boundaries are defined by:
A)The geographies of the markets that are supplied by the incumbents
B)The type of product which is sold,and the type of customers willing to pay for the product
C)Price homogeneity-within the confines of a market,a single price rules
D)Substitutability on both the demand side and the supply side

Question

Quizplus · Accepted Answer

The definition of a market's boundaries is based on the concept of substitutability on both the demand side and the supply side. This means that if there are substitute products available in the market, the consumer may switch to that product when the price of the product changes or for other reasons. Similarly, the supplier may switch to producing substitute products in response to changes in the market conditions. This is why D is the correct choice. The other options do play a role in defining the boundaries of a market, but they are not the primary factors.

A Market's Boundaries Are Defined By