Multiple Choice
Which of the following best describes the author's claim regarding price competition among products in competitive markets?
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3. The Market Forces of Supply and Demand
Competitive Markets
Multiple Choice
In a competitive market, which strategy is most likely to help a new business compete against similar well-established businesses in a community?
A
Reducing product quality to minimize costs
B
Ignoring customer preferences and focusing only on production efficiency
C
Avoiding advertising to save on marketing expenses
D
Offering products at lower prices to attract price-sensitive customers
Verified step by step guidance1
Understand the nature of a competitive market, where many sellers offer similar products and consumers have choices based on price, quality, and other factors.
Recognize that in such markets, businesses often compete by differentiating their products or by adjusting prices to attract customers.
Evaluate the given strategies: reducing product quality may harm reputation, ignoring customer preferences can lead to losing customers, and avoiding advertising might reduce market visibility.
Identify that offering products at lower prices is a common and effective strategy to attract price-sensitive customers, especially when products are similar and customers are sensitive to price changes.
Conclude that competing on price by offering lower prices is the most likely successful strategy for a new business entering a competitive market with well-established competitors.
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