Economic analysis of product differentiation leads to all of the following conclusions except one.Which is the exception?
A)Product differentiation makes it harder for firms to collude.
B)Product differentiation makes price leadership harder to maintain.
C)Product differentiation sometimes contributes to wasteful allocation of resources.
D)Product differentiation must be based on real, substantive differences among products.
E)There is a tradeoff between using resources efficiently and providing consumers with wide choices.

Question

Quizplus · Accepted Answer

Economic analysis of product differentiation suggests that firms should base their differentiation on real, substantive differences among products. This is not a conclusion that is contradicted by economic analysis. The other conclusions listed are supported by economic analysis of product differentiation.

Economic Analysis of Product Differentiation Leads to All of the Following