Question

Competition in quality and service may be just as effective as price competition in giving buyers more for their money. This statement is true

1) when quality and price are consistent across products.
2) if consumers value quality and service more than a lower price.
3) if producers face similar costs.
4) when all firms charge a similar price.

Answer 1

Competition in quality and service can be just as effective as price competition in giving buyers more for their money in several situations, including when quality and price are consistent across products, consumers value quality and service more than a lower price, and producers face similar costs.

Step-by-step explanation:

Competition in quality and service can be as effective as price competition in providing value to buyers. It can give buyers more for their money in several situations:

1. If quality and price are consistent across products: When multiple businesses offer similar products with similar quality and pricing, competition in quality and service becomes crucial in differentiating them. Buyers are more likely to choose a product based on the quality and level of service provided.
2. If consumers value quality and service more than a lower price: Some buyers prioritize quality and good customer service over a lower price. They are willing to pay a premium for products that offer superior quality and excellent service.
3. If producers face similar costs: When producers have similar costs, they have to compete on factors other than price to attract buyers. They differentiate themselves by offering better quality and superior service.

It is important to note that the given statement may not be true when all firms charge a similar price. In such cases, price competition becomes the primary factor influencing buyers' decisions.