Price competition is most likely to occur in each of the following situations EXCEPT when:
A)all sellers in the market sell identical products.
B)market demand is rising.
C)switching costs are low.
D)the prices charged by sellers are easy to observe.

Question

Quizplus · Accepted Answer

When market demand is rising, sellers have less incentive to compete on price as each seller can sell their goods for a higher price without losing any customers. In fact, price competition is more likely to occur when demand is falling as sellers compete for a shrinking pool of customers. Therefore, B is the correct answer.

Price Competition Is Most Likely to Occur in Each of the Following