Because More Competition Implies Greater Convergence on a Standard Price,a

question 63

Multiple Choice

Because more competition implies greater convergence on a standard price,a large number of suppliers in a product category most likely results in:

• A)narrower price bands.
• B)increased price transparency.
• C)broader price bands.
• D)increase in the sales of the product.

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Definitions:

Monopolistically Competitive

Describes a market structure where many firms sell products that are similar but not identical, leading to competition based on product differentiation.

More Elastic

Describes a situation where the demand or supply for a good is more responsive to changes in price.

Monopolistically Competitive

A market structure featuring many sellers offering differentiated products, with free entry and exit in the market.

Demand Curve

A graph that illustrates the relationship between the price of a good or service and the quantity demanded by consumers.