A firm will have greater pricing freedom if the product enjoys a clear competitive advantage.

Question

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If a product has a clear competitive advantage, consumers are more likely to be willing to pay a higher price for it. This gives the firm greater pricing freedom as it can set a higher price without losing too many customers to competitors. Conversely, if a product does not have a competitive advantage, the firm may need to set a lower price to remain competitive in the market.

A Firm Will Have Greater Pricing Freedom If the Product