_____________ differentiation is concerned with product quality (inferiority or superiority), whereas ______________ differentiation is concerned with product substitutability.
A)Horizontal; vertical
B)Vertical; horizontal
C)Generic; vertical
D)Vertical; oligopoly

Question

Quizplus · Accepted Answer

Vertical differentiation refers to differences in quality or performance of products, while horizontal differentiation refers to differences in product attributes or characteristics. Thus, the first blank should be filled with "vertical". On the other hand, the second blank refers to how easily a product can be substituted by another product in the market, which is the definition of horizontal differentiation. Thus, the second blank should be filled with "horizontal". Therefore, the correct answer is B. Vertical differentiation is concerned with differences in quality, while horizontal differentiation is concerned with differences in substitutability. Therefore, option B - Vertical differentiation; horizontal differentiation - is the correct choice. Options C and D are not relevant to the given scenario, and option A incorrectly identifies horizontal differentiation as being concerned with product quality.

_____________ Differentiation Is Concerned with Product Quality (Inferiority or Superiority)