Multiple Choice
Which of the following helps retailers to be successful with the buy-online/pick-up-in-store option in competitive markets?
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3. The Market Forces of Supply and Demand
Competitive Markets
Multiple Choice
In competitive markets, businesses need to keep track of and have constant knowledge about competitor pricing in order to:
A
increase barriers to entry for new firms
B
adjust their own prices to remain competitive
C
maximize government subsidies
D
reduce the elasticity of demand for their products
Verified step by step guidance1
Step 1: Understand the nature of competitive markets, where many firms sell similar products and no single firm can influence the market price significantly.
Step 2: Recognize that in such markets, firms are price takers and must be aware of competitors' prices to avoid losing customers.
Step 3: Analyze why tracking competitor pricing is important: it allows firms to adjust their own prices to remain attractive to consumers and maintain market share.
Step 4: Consider the other options: increasing barriers to entry, maximizing government subsidies, and reducing elasticity of demand are not directly achieved by monitoring competitor prices in competitive markets.
Step 5: Conclude that the primary reason firms keep constant knowledge of competitor pricing is to adjust their own prices to remain competitive.
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