Critical Reasoning

When the products of several competing suppliers are perceived by consumers to be essentially the same, classical economics predicts that price competition will reduce prices to the same minimal levels and all suppliers' profits to the same minimal levels. Therefore, if classical economics is true, and given suppliers' desire to make as much profit as possible, it should be expected that .................

(A) in a crowded market widely differing prices will be charged for products that are essentially the same as each other
(B) as a market becomes less crowded as suppliers leave, the profits of the remaining suppliers will tend to decrease
(C) each supplier in a crowded market will try to convince consumers that its product differs significantly from its competitors' products.
(D) when consumers are unable to distinguish the products in a crowded market, consumers will judge that the higher-priced products are of higher quality
(E) suppliers in crowded markets will have more incentive to reduce prices and thus increase sales than to introduce innovations that would distinguish their product from their competitors' products

[spoiler]OA:Later[/spoiler]

no takers for this yet? Sounds Odd!! Common BTG guys!!!

IMO C

The supplier will try to convince that his product is different from other's product, then only he can get more profit.

The answer is C .

With all other parameters like pricing / profit already being normalized it is expected of traders to try and bring out the USP of their product so as to earn profit by virtue of volumes.

kvcpk wrote:When the products of several competing suppliers are perceived by consumers to be essentially the same, classical economics predicts that price competition will reduce prices to the same minimal levels and all suppliers' profits to the same minimal levels. Therefore, if classical economics is true, and given suppliers' desire to make as much profit as possible, it should be expected that .................

(A) in a crowded market widely differing prices will be charged for products that are essentially the same as each other
(B) as a market becomes less crowded as suppliers leave, the profits of the remaining suppliers will tend to decrease
(C) each supplier in a crowded market will try to convince consumers that its product differs significantly from its competitors' products.
(D) when consumers are unable to distinguish the products in a crowded market, consumers will judge that the higher-priced products are of higher quality
(E) suppliers in crowded markets will have more incentive to reduce prices and thus increase sales than to introduce innovations that would distinguish their product from their competitors' products

[spoiler]OA:Later[/spoiler]

OA is C.. Thanks for your comments!!

what is wrong with E? I had to choose between C and E, and I finally folded and chose E.

Help please.
Any takers?

Don't you think that this sentence is flowed from SC view?

if classical economics is true, and given suppliers' desire to make as much profit as possible, it SHOULD be expected that ...

i think Manhattan says that we have to avoid use SHOULD anywhere in IF sentences.

Why not D!!

Choice E is not necessarily something you can EXPECT. If lack of product differentiation leads to minimum prices (the prompt), we can expect profit-minded companies to do SOMETHING: either differentiate the product or lower the price more . . . but choice E not only leaps too far (shutting off differentiation for no reason), it suggests that prices could be lowered more, prices the prompt says are already minimal.


As for D, it shifts the focus to consumers, while the passage is all about suppliers. We have no basis for drawing conclusions about consumer behavior from the prompt.