Consider a market in which consumer indifference curves are relatively steep. Firms in the industry are pursuing

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Consider a market in which consumer indifference curves are relatively steep. Firms in the industry are pursuing two positioning strategies: some firms are producing a

“basic” product that provides satisfactory performance; others are producing an enhanced product that provides performance superior to that of the basic product.

Consumer surplus parity currently exists in the industry. Are the prices of the basic and the enhanced product likely to be significantly different or about the same? Why?

How would the answer change if consumer indifference curves were relatively flat?

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Economics Of Strategy

ISBN: 9781118273630

6th Edition

Authors: David Besanko, David Dranove, Scott Schaefer, Mark Shanley

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