Multiple Choice
In the context of competitive markets, a differentiation strategy enables a business to address the five competitive forces by:
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3. The Market Forces of Supply and Demand
Competitive Markets
Multiple Choice
Uber, Airbnb, and Hotels.com are examples of:
A
firms that operate as monopolies in their respective industries
B
platforms that facilitate transactions in competitive markets
C
traditional brick-and-mortar businesses
D
government agencies regulating market entry
Verified step by step guidance1
Identify the nature of Uber, Airbnb, and Hotels.com in the market. These companies do not produce goods or services themselves but instead connect buyers and sellers or service providers and consumers.
Understand the concept of a platform in microeconomics: a platform is a business model that creates value by facilitating exchanges between two or more interdependent groups, usually consumers and producers.
Recognize that these companies operate in competitive markets by enabling transactions between many independent service providers (e.g., drivers, hosts, hotels) and consumers, rather than controlling the entire market or acting as a monopoly.
Eliminate other options by recalling that these firms are not traditional brick-and-mortar businesses since they primarily operate online, nor are they government agencies, and they do not have monopoly power in their industries.
Conclude that Uber, Airbnb, and Hotels.com are best described as platforms that facilitate transactions in competitive markets.
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