A company will be subject to price competition if:
A)other producers are selling in the product market.
B)there is successful product differentiation in the product market.
C)customers view its product as the same as or very similar to the products of rival companies.
D)barriers to entry reduce the number of firms participating in the product market.

Question

Quizplus · Accepted Answer

Price competition arises when customers perceive the products of rival companies to be the same as or very similar to the product of the company. In this situation, the company has to compete on the basis of price rather than differentiation. Factors such as the number of firms in the product market and entry barriers can influence the degree of price competition, but they are not a definitive determinant. Successful product differentiation, on the other hand, reduces the degree of price competition.

A Company Will Be Subject to Price Competition If