Which economic concept is demonstrated when a firm lowers prices in a niche market to maintain market share?

Which economic concept is demonstrated when a firm lowers prices in a niche market to maintain market share?

• A. Entrepreneurship
• B. Competition
• C. Opportunity cost
• D. Law of demand

Answer: (B)

The main idea here is how firms compete for customers in a market. When a company cuts prices in a niche market to defend its share, it’s engaging in competitive behavior aimed at attracting or keeping customers in the face of rival firms. This is about rivalry and strategic moves to win business, which is the essence of competition. Entrepreneurship would involve creating new products or starting new ventures, not specifically defending market position through price cuts. Opportunity cost is about weighing what you give up when choosing one option over another, not the act of competing with rivals. The law of demand describes how price and quantity demanded move in relation to each other, but the scenario emphasizes competitive strategy to maintain share rather than the general price-quantity relationship.

The main idea here is how firms compete for customers in a market. When a company cuts prices in a niche market to defend its share, it’s engaging in competitive behavior aimed at attracting or keeping customers in the face of rival firms. This is about rivalry and strategic moves to win business, which is the essence of competition.

Entrepreneurship would involve creating new products or starting new ventures, not specifically defending market position through price cuts. Opportunity cost is about weighing what you give up when choosing one option over another, not the act of competing with rivals. The law of demand describes how price and quantity demanded move in relation to each other, but the scenario emphasizes competitive strategy to maintain share rather than the general price-quantity relationship.