Which statement is NOT an effect of competition entering the market?

Which statement is NOT an effect of competition entering the market?

• A. Provides more choice for customers
• B. Brings passing trade to the area that the business can take advantage of
• C. Keeps prices high to protect profits
• D. Competition can lower prices, undercutting the business and forcing them to lower prices too or risk losing customers

Answer: (C)

When competition enters a market, firms fight to win customers by offering better value, which typically increases options for shoppers and can attract more people through notice and promotions. More choice and the chance to capture passing trade are common effects because new entrants raise the incentives to improve, market, and differentiate. Prices are also often pressured downward as rivals undercut each other to win sales. The statement that prices stay high to protect profits isn’t an expected outcome of competition; in a competitive environment, prices tend to fall or be kept in check by rivals rather than stay elevated.

When competition enters a market, firms fight to win customers by offering better value, which typically increases options for shoppers and can attract more people through notice and promotions. More choice and the chance to capture passing trade are common effects because new entrants raise the incentives to improve, market, and differentiate. Prices are also often pressured downward as rivals undercut each other to win sales. The statement that prices stay high to protect profits isn’t an expected outcome of competition; in a competitive environment, prices tend to fall or be kept in check by rivals rather than stay elevated.