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When the products of several competing suppliers are perceived by

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When the products of several competing suppliers are perceived by [#permalink]

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Which of the following best completes the passage below?

When the products of several competing suppliers are perceived by consumers to be essentially the same, classical economics predicts that price competition will reduce prices to the same minimal levels and all suppliers’ profits to the same minimal levels. Therefore, if classical economics is true, and given suppliers’ desire to make as much profit as possible, it should be expected that ____________

(A) in a crowded market widely differing prices will be charged for products that are essentially the same as each other

(B) as a market becomes less crowded as suppliers leave, the profits of the remaining suppliers will tend to decrease

(C) each supplier in a crowded market will try to convince consumers that its product differs significantly from its competitors’ products.

(D) when consumers are unable to distinguish the products in a crowded market, consumers will judge that the higher-priced products are of higher quality

(E) suppliers in crowded markets will have more incentive to reduce prices and thus increase sales than to introduce innovations that would distinguish their product from their competitors’ products
[Reveal] Spoiler: OA

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Last edited by broall on 23 Oct 2017, 08:11, edited 3 times in total.
Reformatted question

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Re: When the products of several competing suppliers are perceived by [#permalink]

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New post 20 Jan 2010, 09:37
IMO C

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Re: When the products of several competing suppliers are perceived by [#permalink]

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New post 20 Jan 2010, 09:39
is it E?

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Re: When the products of several competing suppliers are perceived by [#permalink]

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New post 20 Jan 2010, 10:23
Its C , its the only way the supplier can make profits

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Re: When the products of several competing suppliers are perceived by [#permalink]

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New post 20 Jan 2010, 16:01
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Its C..... when classic economic fails...... home grown marketing rules! ;) :good
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Re: When the products of several competing suppliers are perceived by [#permalink]

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New post 29 Jun 2010, 17:30
I go for C

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Re: When the products of several competing suppliers are perceived by [#permalink]

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New post 03 Jul 2010, 16:37
C it is.

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Re: When the products of several competing suppliers are perceived by [#permalink]

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New post 06 Nov 2011, 00:44
Don't you think that this sentence is flowed from SC view?

if classical economics is true, and given suppliers’ desire to make as much profit as possible, it SHOULD be expected that ...

i think Manhattan says that we have to avoid use SHOULD anywhere in IF sentences.

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Re: When the products of several competing suppliers are perceived by [#permalink]

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New post 08 Nov 2011, 07:08
my answer is C

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Re: When the products of several competing suppliers are perceived by [#permalink]

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When the products of several competing suppliers are perceived by consumers to be essentially the same, classical economics predicts that price competition will reduce prices to the same minimal levels and all suppliers’ profits to the same minimal levels. Therefore, if classical economics is true, and given suppliers’ desire to make as much profit as possible, it should be expected that .................

(A) in a crowded market widely differing prices will be charged for products that are essentially the same as each other
(B) as a market becomes less crowded as suppliers leave, the profits of the remaining suppliers will tend to decrease
(C) each supplier in a crowded market will try to convince consumers that its product differs significantly from its competitors’ products.
(D) when consumers are unable to distinguish the products in a crowded market, consumers will judge that the higher-priced products are of higher quality
(E) suppliers in crowded markets will have more incentive to reduce prices and thus increase sales than to introduce innovations that would distinguish their product from their competitors’ products
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Last edited by broall on 01 Jun 2017, 08:27, edited 1 time in total.
Merged topic. Please search before posting question.

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Re: When the products of several competing suppliers are perceived by [#permalink]

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New post 15 Sep 2013, 13:34
Great problem. Took me a few seconds to find whether it should be C or D. After re-reading the stem it is clear that similar products lead to a price reduction. Hence, a supplier should prove that its product is different from the competitions.

[Reveal] Spoiler:
C

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Re: When the products of several competing suppliers are perceived by [#permalink]

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mojorising800 wrote:
Which of the following best completes the passage below?
When the products of several competing suppliers are perceived by consumers to be essentially the same,
classical economics predicts that price competition will reduce prices to the same minimal levels and all
suppliers’ profits to the same minimal levels. Therefore, if classical economics is true, and given suppliers’
desire to make as much profit as possible, it should be expected that .
(A) in a crowded market widely differing prices will be charged for products that are essentially the same as
each other
(B) as a market becomes less crowded as suppliers leave, the profits of the remaining suppliers will tend to
decrease
(C) each supplier in a crowded market will try to convince consumers that its product differs significantly from
its competitors’ products.
(D) when consumers are unable to distinguish the products in a crowded market, consumers will judge that
the higher-priced products are of higher quality
(E) suppliers in crowded markets will have more incentive to reduce prices and thus increase sales than to
introduce innovations that would distinguish their product from their competitors’ products


Good one;
Reading the passage ; discussion about the classic theory and product cost. When you carefully read the passage you will find the that the customers are perceiving the products to be the same; which gives you a hint of what the correct option might based on. Then while scrolling through the options C, D, E seems to be the answers. But wait, E discuss about innovation; D discusses about the product quality both of which are out of scope. Remaining is C, But wait, as A also seems correct which states about the different price tags at lower levels ? But if you remember the first point that the consumer perceived the products same. So what going to make them convinced to buy something which is perceived as same. Yes if they are convinced that the product they are purchasing is different. Hence and-C
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Re: When the products of several competing suppliers are perceived by [#permalink]

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New post 02 Jan 2014, 02:44
“…….When the products of several competing suppliers are perceived by consumers to be essentially the same”, when customers are already perceived that all the products are same, then in C answer choice how come customers will be convinced that that product differs from other product slightly.

I am not very much convinced from C answer choice, could someone please explain this and also why A is wrong?

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Re: When the products of several competing suppliers are perceived by [#permalink]

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FACT- When the products of several competing suppliers are perceived by consumers to be essentially the same,classical economics predicts that price competition will reduce prices to the same minimal levels and all suppliers’ profits to the same minimal levels.
CONCLUSION- if classical economics is true, and given suppliers’ desire to make as much profit as possible, it should be expected that----THEY WOULD NOT LIKE TO BE BRANDED AND WOULD THEREFORE TRY TO POSE DIFFERENTLY.........

(C) each supplier in a crowded market will try to convince consumers that its product differs significantly from its competitors’ products. CORRECT....

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Re: When the products of several competing suppliers are perceived by [#permalink]

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1904praveen wrote:
“…….When the products of several competing suppliers are perceived by consumers to be essentially the same”, when customers are already perceived that all the products are same, then in C answer choice how come customers will be convinced that that product differs from other product slightly.

I am not very much convinced from C answer choice, could someone please explain this and also why A is wrong?

Hi 1904praveen

I would like to compare choices C and A below and I hope it would answer your questions.

(A) in a crowded market widely differing prices will be charged for products that are essentially the same as
each otherEven though widely differing prices are initially charged for products that are essentially same as each other, according to classical economics prediction, due to competition, prices will be later reduced and profits will be lowered to minimal levels.
(C) each supplier in a crowded market will try to convince consumers that its product differs significantly from
its competitors’ products.Now if the suppliers are able to convince the consumers enough that their product is significantly different in the market, then the competition may not force them to lower their prices but rather allow them to maximize the profits.

Do you agree with me?
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Re: When the products of several competing suppliers are perceived by [#permalink]

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New post 03 Jan 2014, 03:58
cssk wrote:
1904praveen wrote:
“…….When the products of several competing suppliers are perceived by consumers to be essentially the same”, when customers are already perceived that all the products are same, then in C answer choice how come customers will be convinced that that product differs from other product slightly.

I am not very much convinced from C answer choice, could someone please explain this and also why A is wrong?

Hi 1904praveen

I would like to compare choices C and A below and I hope it would answer your questions.

(A) in a crowded market widely differing prices will be charged for products that are essentially the same as
each otherEven though widely differing prices are initially charged for products that are essentially same as each other, according to classical economics prediction, due to competition, prices will be later reduced and profits will be lowered to minimal levels.
(C) each supplier in a crowded market will try to convince consumers that its product differs significantly from
its competitors’ products.Now if the suppliers are able to convince the consumers enough that their product is significantly different in the market, then the competition may not force them to lower their prices but rather allow them to maximize the profits.

Do you agree with me?


Hi cssk,

I hope your explanation helped me. Thanks a lot.

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Re: When the products of several competing suppliers are perceived by [#permalink]

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New post 29 Jan 2014, 13:48
Which of the following best completes the passage below?

When the products of several competing suppliers are perceived by consumers to be essentially the same,
classical economics predicts that price competition will reduce prices to the same minimal levels and all
suppliers' profits to the same minimal levels. Therefore, if classical economics is true, and given
suppliers' desire to make as much profit as possible, it should be expected that
(A) in a crowded market widely differing prices will be charged for products that are essentially the same as each other
(B) as a market becomes less crowded as suppliers leave, the profits of the remaining suppliers will tend to decrease
(C) each supplier in a crowded market will try to convince consumers that its product differs significantly from its competitors' products.
(D) when consumers are unable to distinguish the products in a crowded market, consumers will judge that the higher-priced products are of higher quality
(E) suppliers in crowded markets will have more incentive to reduce prices and thus increase sales than to introduce innovations that would distinguish their product from their competitors

Hello!

I was able to pre think and arrived at choice C as the answer. "If supplier wants to make profit, It should be expected that ___ (supplier should take some action) and since consumers think of all products as same the action would be to convince them about products unique features

can you tell me if (B) was reworded as:

as a market becomes less crowded as suppliers leave, the profits of the remaining suppliers will tend to increase

will this be correct inference?
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Re: When the products of several competing suppliers are perceived by [#permalink]

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New post 29 Jan 2014, 13:51
paranoidvik wrote:
Which of the following best completes the passage below?

When the products of several competing suppliers are perceived by consumers to be essentially the same,
classical economics predicts that price competition will reduce prices to the same minimal levels and all
suppliers' profits to the same minimal levels. Therefore, if classical economics is true, and given
suppliers' desire to make as much profit as possible, it should be expected that
(A) in a crowded market widely differing prices will be charged for products that are essentially the same as each other
(B) as a market becomes less crowded as suppliers leave, the profits of the remaining suppliers will tend to decrease
(C) each supplier in a crowded market will try to convince consumers that its product differs significantly from its competitors' products.
(D) when consumers are unable to distinguish the products in a crowded market, consumers will judge that the higher-priced products are of higher quality
(E) suppliers in crowded markets will have more incentive to reduce prices and thus increase sales than to introduce innovations that would distinguish their product from their competitors

Hello!

I was able to pre think and arrived at choice C as the answer. "If supplier wants to make profit, It should be expected that ___ (supplier should take some action) and since consumers think of all products as same the action would be to convince them about products unique features

can you tell me if (B) was reworded as:

as a market becomes less crowded as suppliers leave, the profits of the remaining suppliers will tend to increase

will this be correct inference?


Also, why choice D is incorrect?
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Re: When the products of several competing suppliers are perceived by [#permalink]

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New post 29 Jan 2014, 14:00
See the last line of argument.. some action is expected from suppliers to maximize their profits , while Choice D Deals with perception of the products by consumers, which is insignificant here.

Even if consumers start to think that a product is of higher quality, it doesn't mean that it will help suppliers maximize its profits.

Hope that makes sense to you. :)

Regards
Dj.

paranoidvik wrote:
paranoidvik wrote:
Which of the following best completes the passage below?

When the products of several competing suppliers are perceived by consumers to be essentially the same,
classical economics predicts that price competition will reduce prices to the same minimal levels and all
suppliers' profits to the same minimal levels. Therefore, if classical economics is true, and given
suppliers' desire to make as much profit as possible, it should be expected that
(A) in a crowded market widely differing prices will be charged for products that are essentially the same as each other
(B) as a market becomes less crowded as suppliers leave, the profits of the remaining suppliers will tend to decrease
(C) each supplier in a crowded market will try to convince consumers that its product differs significantly from its competitors' products.
(D) when consumers are unable to distinguish the products in a crowded market, consumers will judge that the higher-priced products are of higher quality
(E) suppliers in crowded markets will have more incentive to reduce prices and thus increase sales than to introduce innovations that would distinguish their product from their competitors

Hello!

I was able to pre think and arrived at choice C as the answer. "If supplier wants to make profit, It should be expected that ___ (supplier should take some action) and since consumers think of all products as same the action would be to convince them about products unique features

can you tell me if (B) was reworded as:

as a market becomes less crowded as suppliers leave, the profits of the remaining suppliers will tend to increase

will this be correct inference?


Also, why choice D is incorrect?

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Re: When the products of several competing suppliers are perceived by [#permalink]

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Re: When the products of several competing suppliers are perceived by   [#permalink] 30 Jan 2014, 06:06

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