Question
A factory owner has the option to spend 3 million to outfit a factory with new machines that will make a better product. What type of competition would this be? The owner knows that he cannot raise the price of his product or he would lose too much market share. If possible, give a reason why the owner might consider spending money to upgrade a factory if he cannot make more money selling the product.(1 point)
Responses
This is price competition. Improving the quality of the product could increase sales, which could allow the owner to make a higher profit.
This is price competition. Improving the quality of the product could increase sales, which could allow the owner to make a higher profit.
This is non-price competition. Improving the quality of the product could increase sales, which could allow the owner to make a higher profit.
This is non-price competition. Improving the quality of the product could increase sales, which could allow the owner to make a higher profit.
This is non-price competition. There is not a good reason to upgrade a factory if the new product cannot be sold for more money than the old product.
This is non-price competition. There is not a good reason to upgrade a factory if the new product cannot be sold for more money than the old product.
This is price competition. There is not a good reason to upgrade a factory if the new product cannot be sold for more money than the old product.
This is price competition. There is not a good reason to upgrade a factory if the new product cannot be sold for more money than the old product.
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Responses
This is price competition. Improving the quality of the product could increase sales, which could allow the owner to make a higher profit.
This is price competition. Improving the quality of the product could increase sales, which could allow the owner to make a higher profit.
This is non-price competition. Improving the quality of the product could increase sales, which could allow the owner to make a higher profit.
This is non-price competition. Improving the quality of the product could increase sales, which could allow the owner to make a higher profit.
This is non-price competition. There is not a good reason to upgrade a factory if the new product cannot be sold for more money than the old product.
This is non-price competition. There is not a good reason to upgrade a factory if the new product cannot be sold for more money than the old product.
This is price competition. There is not a good reason to upgrade a factory if the new product cannot be sold for more money than the old product.
This is price competition. There is not a good reason to upgrade a factory if the new product cannot be sold for more money than the old product.
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Answers
GPT-4o mini
The correct response is:
**This is non-price competition. Improving the quality of the product could increase sales, which could allow the owner to make a higher profit.**
In this scenario, the factory owner is investing in upgrades to improve product quality rather than changing the price. This investment aims to differentiate the product in the market, potentially attracting more customers and increasing sales volume, which can lead to higher overall profits despite maintaining the same price point.
**This is non-price competition. Improving the quality of the product could increase sales, which could allow the owner to make a higher profit.**
In this scenario, the factory owner is investing in upgrades to improve product quality rather than changing the price. This investment aims to differentiate the product in the market, potentially attracting more customers and increasing sales volume, which can lead to higher overall profits despite maintaining the same price point.