Which of the following supports the contention that pure competitors have a strong incentive to engage in R&D?
A)Entry to purely competitive industries is easy, and thus profit from innovation is quickly competed away.
B)Pure competitors cannot risk being complacent about innovation because a new product, production technique, or distribution method could undermine their normal profit and drive them out of the market.
C)Most purely competitive industries are increasing-cost industries.
D)Pure competitors are happy to earn only a normal profit.

Question

Quizplus · Accepted Answer

Pure competitors must innovate to maintain or enhance their market position because any technological advancement by competitors can significantly impact their profitability and market share. This creates a strong incentive for R&D to stay competitive and avoid being outperformed by rivals.

Which of the Following Supports the Contention That Pure Competitors