The level of competition in a given market tends to fall if:
A)the minimum efficient scale of firms decreases.
B)the number of substitutes decreases.
C)import quotas are relaxed.
D)the number of potential entrants rises.

Question

Quizplus · Accepted Answer

The level of competition in a given market tends to fall if the number of substitutes decreases. This is because fewer substitutes mean consumers have fewer alternatives to choose from, which can reduce the competitive pressure on existing firms to innovate or lower prices.

The Level of Competition in a Given Market Tends to Fall