The rivalry among competing sellers in a competitive market tends to be more intense when:

• A. products are highly differentiated
• B. there are many firms offering similar products
• C. demand for the product is inelastic
• D. barriers to entry are high

Answer: (B)

Verified step by step guidance

1. Step 1: Understand the concept of competition intensity in a market. In microeconomics, the intensity of rivalry among sellers depends on factors like the number of firms, product differentiation, demand elasticity, and barriers to entry.
2. Step 2: Analyze the effect of product differentiation. When products are highly differentiated, firms have some market power and less direct competition, which tends to reduce rivalry intensity.
3. Step 3: Consider the number of firms offering similar products. When many firms offer similar or identical products, competition becomes more intense because consumers can easily switch between sellers, increasing rivalry.
4. Step 4: Examine demand elasticity. If demand is inelastic, consumers are less sensitive to price changes, which can reduce the intensity of competition since firms have less incentive to undercut each other.
5. Step 5: Evaluate barriers to entry. High barriers to entry limit the number of firms in the market, reducing competition intensity. Conversely, low barriers allow more firms to enter, increasing rivalry.