ECONOMICS
CONSUMERS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Competition usually makes the price higher
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Competition doe s not usually affect the price.
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Competition usually makes the price lower.
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Competition means you do not have to pay for the item.
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Detailed explanation-1: -Greater competition among sellers results in a lower product market price. If the same popular toy had numerous producers instead of only one, the price would be lower because the producer knows the consumer could get the toy somewhere else. The cycle of competition between sellers never ends.
Detailed explanation-2: -Competition-driven prices are often market-oriented and are set based on how others are pricing products and services in the marketplace. So, the seller makes a decision based on the prices set by its competitors. Prices between competitors may not necessarily be the same; one competitor may end up lowering its price.
Detailed explanation-3: -Competition among buyers increases prices and allocates goods and services to those people who are willing and able to pay the most for them. Competition among sellers results in lower costs and prices, higher product quality, and better customer service.
Detailed explanation-4: -We prefer Stigler’s (1987) definition: price discrimination is present when two. or more similar goods are sold at prices that are in different ratios to marginal. costs. 1For further discussion, see Phlips (1983, pp. 5-7). Ch. I 0: Price Discrimination. 599. More items