Product Differentiation Often Gives a Producer Only a Small Amount

question 30

Multiple Choice

Product differentiation often gives a producer only a small amount of monopoly power because

• A) there can be little or no substitution between product groups.
• B) the monopolistic competitor faces a downward-sloping demand curve.
• C) the presence of excess capacity gives the producer some freedom to vary output.
• D) the product may be unique, but close substitutes are available.
• E) the industry is difficult to define and hence cannot be regulated.

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Definitions:

Sales Mix

The proportion of different products or services that make up a company's total sales.

Composite Mix

A method or strategy combining different products, services, or resources to achieve a desired outcome or performance in business.

Multiproduct Company

A business that produces and sells more than one type of product.

External Financial Reporting

The process of providing financial information to external users, such as investors or creditors, to help in decision-making.