The principle of minimum differentiation describes a tendency of competitors to
A) lower price.
B) offer similar products or policies.
C) decrease the quantity of goods available.
D) offer public goods for sale.
E) free ride.

Question

Quizplus · Accepted Answer

The principle of minimum differentiation suggests that competitors in a market will tend to offer products or policies that are very similar in order to avoid losing market share to one another. This is because if one competitor creates a significantly different product, it may attract customers away from the other competitors, thus reducing their share of the market. Therefore, option B - offering similar products or policies - is the best choice.

The Principle of Minimum Differentiation Describes a Tendency of Competitors