The figure given below shows the revenue and cost curves of a monopolistically competitive firm.Figure 12.4
MR: Marginal revenue curve
ATC: Average total cost curve
MC: Marginal cost curve
-Which of the following is an example of price competition?
A)Nike signs LeBron James to a $90 million contract for endorsements.
B)Kellogg's puts the images of Snap, Crackle, and Pop on boxes of Cocoa Krispies, linking the cereal with Rice Krispies.
C)McDonald's introduces new garden McSalads.
D)Tropicana introduces the Blue Raspberry Rush juice.
E)Apple offers a 20% discount on its new range of iPhones.

Question

The figure given below shows the revenue and cost curves of a monopolistically competitive firm.Figure 12.4
  MR: Marginal revenue curve
ATC: Average total cost curve
MC: Marginal cost curve
-Which of the following is an example of price competition?
A)Nike signs LeBron James to a $90 million contract for endorsements. 
B)Kellogg's puts the images of Snap, Crackle, and Pop on boxes of Cocoa Krispies, linking the cereal with Rice Krispies. 
C)McDonald's introduces new garden McSalads. 
D)Tropicana introduces the Blue Raspberry Rush juice. 
E)Apple offers a 20% discount on its new range of iPhones.

Quizplus · Accepted Answer

Offering a discount is a classic example of price competition. Nike signing an endorsement deal, Kellogg's using characters on cereal boxes, McDonald's introducing a new item, and Tropicana introducing a new flavor are all examples of non-price competition (also known as product differentiation).

The Figure Given Below Shows the Revenue and Cost Curves