Question

In a market economy, firms are free to decide what goods they will produce, and they compete with one another for business. How might competition increase the standard of living for the consumers living among a market economy?

A.
Competition will keep prices low and increase the quality of goods.
B.
Competition will increase profits and revenue for businesses.
C.
Competition will guarantee there are never surpluses or shortages.
D.
Competition ensures consumers will be satisfied with the goods they purchase.

Answer 1

A. Competition will keep prices low and increase the quality of goods

Step-by-step explanation:

In the face of competition, a business tends to do whatever is necessary to lower its costs and achieve a higher number of sales to increase profits.

Competition forces businesses to find ways to achieve a competitive advantage so that they can capture a larger market share for their product or service. This leads them to figure out how to reduce costs, improve their product, and so on in order to capture that extra market share.