객관식
In an industry, the threat of entry is high when:
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0. Basic Principles of Economics
Introduction to Economics
객관식
A major drawback of price competition is that:
A
It always results in higher prices for consumers.
B
It can lead to reduced profit margins for firms.
C
It eliminates the need for advertising and marketing.
D
It encourages firms to produce less efficiently.
검증된 단계별 안내1
Step 1: Understand the concept of price competition, which occurs when firms compete primarily by lowering prices to attract customers.
Step 2: Analyze the effects of price competition on firms' profit margins. When firms lower prices, their revenue per unit decreases, which can reduce profit margins if costs remain constant.
Step 3: Consider the impact on consumers. Price competition typically leads to lower prices, benefiting consumers rather than resulting in higher prices.
Step 4: Evaluate the role of advertising and marketing. Price competition does not eliminate the need for these activities; firms may still use them to differentiate their products.
Step 5: Assess efficiency incentives. Price competition often encourages firms to become more efficient to maintain profitability despite lower prices, rather than producing less efficiently.
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