Question

select the best answer. _____ might lead a business to reduce prices on a certain smartphone because the manufacturer is likely to soon introduce a new model.

Answer 1

Businesses in a competitive market may reduce prices on products when new models are expected, and the introduction of cost-saving technology affects the market by lowering equilibrium prices.

Step-by-step explanation:

Competition from firms with better or cheaper products can reduce a business's profits and may lead the business to reduce prices of existing products, such as a smartphone, in anticipation of a new model being introduced by the manufacturer. In a perfectly competitive market, the introduction of new technology that substantially reduces production costs can affect the market by lowering the equilibrium price, as all firms will have the incentive to lower their prices to attract consumers while still maintaining profitability. The firms that are quickest to adopt the new technology will enjoy a temporary edge over competitors, leading to potential above-normal profits until the competitors catch up, as stated by Gregory Lee, former CEO of Samsung, underscoring the relentless pursuit of innovation as a core business strategy.