Question

American solar power incorporated sells solar cells for people to install on their houses. What would the introduction of a Chinese company that also produces solar cells do to the market?

Answer 1

Answer:

A) lower prices

Explanation:

Answer 2

This could have a variety of impacts that this situation could have on the local market. Firstly, the introduction of a Chinese company would mean that there would more competition for the American solar power company which would then have to contend with the Chinese company for sales. They would then be in a race to bring the most affordable options to the consumers as well as new advances in the technology or greater service. This would mean that the consumers would benefit greatly from this situation as they would be getting better products and service for an affordable cost.

Also, both companies could have a working arrangement where they act as an oligopoly and dominate the solar power industry in that particular market. Although, more companies brings more competition, when there aren't a multiplicity of  competitors, there is always the danger that the few businesses will band together and operate as one entity where they set specific prices, standards of service and technological advances introduced. They would only superficially be competing with each other. In this arrangement, the consumers would endure the same standard as having one entity dominating the market.

Another scenario would be where the American solar power company makes a superior product and as such would promote their products to the market as 'higher end' which would ensure they have a core and stable consumer base.