6. The assumption of the perfectlycompetitive model is that products sold by all

Question

6.   The assumption of the perfectlycompetitive model is that products sold by all retailers arecompletely identical. Under this assumption, as we've seen in thisanalysis, competition between retailers is extremely fierce.

In practice, retailers try to gain some degree of market power bydifferentiating themselves from one another. This might make thedemand curve facing each retailer slightly less like a perfectlycompetitive firm and more like that of a monopoly--a marketstructure sometimes called "monopolistic competition." Which of thefollowing are examples of strategies that a retailer might use toseem different from its competitors?

I. Bundle Vista with other items, like peripherals or MP3players
II. Try to offer Vista at the lowest possible price
III. Offer free technical support for 30 days after a purchase
IV. Serve free cappuccinos in the store
V. Offer a store reward card in which in-store purchases counttoward future rewards A.   I, III, IV, and V only B.   V only C.   II only D.   I only E.   III only F.   I and II only G.   I, II, and III only H.   II, IV, and V only I.   I and III only

Explanation / Answer

A

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