Question

Which of the following statements is true about price competition and demand? a. In price competition, the seller uses promotion to distinguish its product from competing brands. b. The demand curve indicates an inverse relationship between price and quantity demanded. c. A major advantage of price competition is the firm builds brand loyalty. d. Price competition emphasizes product packaging, customer service and other features. e. In price competition, the seller emphasizes distinctive product features.

Answer 1

Answer:

Letter a and b are true.

Explanation:

a. In price competition, the seller uses promotion to distinguish its product from competing brands.

- This statement is true because in a price competition, companies' main focus is on matching or exceeding the price charged by competitors, concentrating efforts to become the lowest cost seller among all competitors.

b. The demand curve indicates an inverse relationship between price and quantity demanded.

- This statement is true because it represents the law of demand, that is, the price and demand curve behaves in the opposite way, because as price increases the quantity demanded decreases and as price decreases the quantity demanded increases.