Which of the Following Statements Is True

question 97

Multiple Choice

Which of the following statements is true?

• A)Economists do not know if optimal product differentiation is achieved.
• B)According to the theory of monopolistic competition, the cost of product differentiation is that firms often suffer losses.
• C)Methods to measure the benefits of product differentiation are well developed.
• D)Product differentiation has its costs, but it does not result in any benefit.
• E)Product differentiation is always desirable for consumers.

---

Definitions:

Market

Any structure that allows buyers and sellers to exchange any type of goods, services, and information.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, with elasticity greater than one indicating a strong response.

Raise Profits

The process of increasing a company's profits through different methods such as reducing costs, increasing sales, or improving productivity.

Inverse Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity of the good that consumers are willing to purchase, plotted with price on the vertical axis and quantity on the horizontal axis.