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Explain the Reason Why Substitute Products Are Taken as a Threat

question 47

Essay

Explain the reason why substitute products are taken as a threat by firms.


Definitions:

Pure Monopolist

A market structure in which a single firm has complete control over the entire market for a product or service, with no close substitutes.

Marginal Cost

The overhead added by producing an extra unit of a product or service.

Profit-Maximizing

A strategy or approach taken by businesses to adjust their price and output levels to achieve the highest possible profit.

Seller

An individual or entity that offers goods or services to others in exchange for compensation.

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