Question

In a certain monopolistically competitive market that is characterized by high prices and equally high-quality merchandise, if a firm's competitors begin to successfully introduce new products that cut into the firm's market share, the firm's best counter- strategy is to:

A. introduce few new products in order to meet competitors head on.
B. reduce its advertising budget in order to save costs. look to the government for protection.
C. ignore its competitors and hope its customers' loyalty carry it through the threat.
D. raise prices in order to increase the revenue.

Answer 1

The correct answer is A

Step-by-step explanation:

In the market which is monopolistically competitive one, it is characterized with high quality as well as high prices and if firm or corporation competitors started to introduce new products in the market.

So, the firm or corporation in order to make counter strategy, then the firm should introduce some or few new products as well so that could meet the competitors head on.