Question

If two restaurants sell many of the same food items but one offers a higher level of service, the service distinction is a form of _____.

local competition

nonprice competition

choice among substitute products

price fixing

Answer 1

Option B is the correct answer, Non Price Competition.

If there are two restaurants in an area, both sell same food items, but one restaurant offers higher level of customer service, it means that restaurants are having non price competition. We can say that there is a competition between the restaurants in intangible terms. Both have same products, same quality, same audience, so one is getting the edge through higher level of customer services. People will tend to go to the restaurant which has better customer services.

Answer 2

Answer;

(C) Non price competition

Explanation;

• Non price competition is a form of competition in which two or more producers use such factors as packaging, delivery, or customer service rather than price to increase demand for their products.
• Firms will engage in non-price competition, in spite of the additional costs involved, because it is usually more profitable than selling for a lower price and avoids the risk of a price war.
• For example a brand name goods often sell more units than the generic counterparts, despite being more expensive.