A small firm has higher costs than its many rivals and sells a product with several close substitutes. Which response is most likely to protect its market share in the long run?
Raise productivity or differentiate the product, because a large price rise may drive customers to rivals
Raise price without changing the product, because competition makes demand perfectly inelastic
Reduce quality and stop all promotion, because consumers cannot switch
Agree to become a monopoly without buying or removing any rival
28 exam-style questions on OCR GCSE Economics 2.5 Competition, covering 2.5.1 Why producers compete, 2.5.2 How competition affects price, 2.5.3 Economic impact of competition, and 2.5.4 Monopoly and oligopoly. Each one has a worked solution and a mark scheme showing where the marks go.