Product Differentiation

question 65

Multiple Choice

Product differentiation

• A)Involves charging different prices to different customers.
• B)Is commonly practiced in perfect competition and monopoly markets.
• C)Involves advertising unique product features.
• D)Is a rarely successful advertising campaign.

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Definitions:

Normal Profit Rate

Zero economic profit, providing just the competitive rate of return on the capital (and labor) of owners. An above-normal profit will draw more entry into the market, whereas a below-normal profit will lead to an exit of investors and capital.

Contestable Market

A market where companies can enter and exit freely, with low barriers to entry and exit, leading to competitive prices and efficient outcomes.

Low Entry And Exit

Refers to markets where there are minimal barriers to starting or exiting a business, leading to high levels of competition and innovation.

Highly Contested

Describes a situation, item, or issue that is the subject of intense competition or dispute among parties.