The reason that innovation promotes competition is because
A) innovative firms can charge any price they want for a new product.
B) it lowers the research and development costs for innovative firms.
C) firms use it to make competitors' products obsolete in the market.
D) government provides patent protection for innovation that lasts for a long time.

Question

Quizplus · Accepted Answer

When firms innovate, they come up with new and improved products, which can make their competitors' products obsolete in the market. This creates competition as competing firms are forced to either come up with their own innovative products or find other ways to stay in the market. Therefore, innovation promotes competition by providing a way for firms to differentiate themselves from their competitors.

The Reason That Innovation Promotes Competition Is Because