Multiple Choice
In competitive markets, companies usually offer a product line instead of just one product to:
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3. The Market Forces of Supply and Demand
Competitive Markets
Multiple Choice
Rivalry among competing sellers in a competitive market grows in intensity when:
A
the number of buyers in the market is very small
B
products offered by sellers are very similar and buyers can easily switch between them
C
there are significant barriers to entry for new firms
D
each seller has substantial market power and can set prices independently
Verified step by step guidance1
Understand the concept of rivalry in a competitive market: Rivalry refers to the intensity of competition among sellers trying to attract buyers.
Recognize that rivalry increases when products are very similar because buyers can easily switch from one seller to another, making price and quality competition more intense.
Note that a small number of buyers does not necessarily increase rivalry among sellers; it may reduce demand and affect market dynamics differently.
Consider that significant barriers to entry usually reduce rivalry because fewer new firms can enter to compete with existing sellers.
Understand that when each seller has substantial market power and can set prices independently, the market is less competitive, so rivalry among sellers tends to be lower.
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