The Principle of Minimum Differentiation Describes a Tendency of Competitors

question 108

Multiple Choice

The principle of minimum differentiation describes a tendency of competitors to

• A) lower price.
• B) offer similar products or policies.
• C) decrease the quantity of goods available.
• D) offer public goods for sale.
• E) free ride.

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Definitions:

Sinking Fund Clause

A provision in a bond contract that requires the issuer to periodically set aside funds to retire a portion of the debt before it matures.

Inflation-Indexed Treasury Securities

Government bonds that are adjusted for inflation to protect investors from the decline in purchasing power.

TIPS

Treasury Inflation-Protected Securities, a type of U.S. government bond designed to help protect investors from inflation, as the principal value adjusts with inflation.

PIKs

Short for "Payment in Kind," a type of financing or loan where the borrower can pay interest or dividends with additional securities instead of cash.