What will happen when a firm raises the price of a differentiated
Product in an imperfectly competitive market?
A)It will see lower sales but will not lose all its sales.
B)It will lose all its sales to competitor firms.
C)It will actually get new customers from other firms.
D)It will see an increase in revenues.

Question

Quizplus · Accepted Answer

In an imperfectly competitive market, where there are few close substitutes for the product, consumers may still value the differentiated product and may be willing to pay the higher price. However, some consumers may switch to the competitor's product, leading to lower sales for the firm. The extent of the sales decrease depends on the degree of differentiation and consumer preferences. Therefore, the firm will see lower sales, but it will not lose all its sales as it still has a differentiated product.

What Will Happen When a Firm Raises the Price of a Differentiated