The toothpaste aisle at a large store that sells personal care products contains many versions of toothpaste produced by a small number of sellers. This indicates that toothpaste producers are engaging in _____ to _____.
A)product differentiation; reduce costs
B)regulatory policy; limit competition
C)cost-switching; stimulate demand
D)brand proliferation; deter new entrants

Question

Quizplus · Accepted Answer

The presence of many versions of toothpaste produced by a small number of sellers suggests that these producers are engaging in brand proliferation to deter new entrants from the market. By offering a wide variety of toothpastes under different brands, established producers are making it more difficult and costly for new competitors to enter the market and gain a share of the market. This strategy helps to protect the market power of existing producers and maintain their profits.

The Toothpaste Aisle at a Large Store That Sells Personal