In a certain monopolistically competitive market that is characterized by high prices and equally high-quality merchandise,if a firm's competitors begin to successfully introduce new products that cut into the firm's market share,the firm's best counter-strategy is to:
A)raise price in order to increase the revenue.
B)introduce its own new products in order to meet competitors head on.
C)reduce its advertising budget in order to save costs.
D)ignore its competitors and hope its customers' loyalty carry it through the threat.
E)look to the government for protection.

Question

Quizplus · Accepted Answer

Introducing its own new products to meet the competition head-on would be the best counter-strategy for the firm in this situation. This would allow the firm to serve the changing needs and preferences of its customers and attract new customers who are interested in trying new products. Additionally, this strategy would help the firm differentiate itself from its competitors by offering unique and innovative products, which would help it maintain its market share and potentially increase its market power.

In a Certain Monopolistically Competitive Market That Is Characterized by High