In competitive markets, businesses determine which products to make or to sell by developing which of the following?

• A. Randomly selected product offerings
• B. Government-mandated production quotas
• C. A production and sales strategy based on market demand
• D. A fixed list of products regardless of consumer preferences

Answer: (C)

Verified step by step guidance

1. Understand that in competitive markets, firms aim to maximize profits by responding to consumer preferences and market signals rather than producing randomly or following fixed quotas.
2. Recognize that government-mandated production quotas are typically not a feature of perfectly competitive markets, as these markets rely on decentralized decision-making.
3. Recall that firms develop a production and sales strategy based on market demand, meaning they analyze consumer preferences and adjust their product offerings accordingly.
4. Note that producing a fixed list of products regardless of consumer preferences would likely lead to inefficiencies and lost profits in a competitive market.
5. Conclude that the correct approach for businesses in competitive markets is to base their production and sales strategy on market demand to meet consumer needs effectively.