Which example is MOST likely to be observed when firms engage mainly in nonprice competition?

A) actively encouraging the sale of generic as opposed to brand-name products
B) advertising and product differentiation
C) discounts offered through coupons
D) low interest rates for financing the purchase of big-ticket items

Question

Vania Puddoo · Accepted Answer

Final Answer : B, Explanation :  Nonprice competition refers to a situation where firms compete with each other by means of advertising and product differentiation rather than by lowering their prices. Therefore, the example of advertising and product differentiation is the most likely to be observed when firms engage mainly in nonprice competition. The other options may also be used by firms competing in the market, but they are not necessarily indicative of firms engaging in nonprice competition.

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