In a competitive market,if one firm raises its price relative to the other firms in the market,consumers are willing to go to another firm because:

Question

Quizplus · Accepted Answer

If the products are similar, consumers have many alternatives to choose from, and are likely to switch to a different firm if one raises its price. This is because there is no product differentiation that justifies a higher price, and the consumer perceives them as perfect substitutes. Therefore, a firm's pricing decision must take into account the price elasticity of demand and the competitive environment in the market, in order to avoid losing customers and market share.

In a Competitive Market,if One Firm Raises Its Price Relative