A firm cuts its price by 10% but removes its free warranty to reduce costs. Rivals keep their prices and warranties unchanged. Which evaluation is most accurate?
The firm's sales must rise because only price matters in competition
The firm's sales must fall because a price cut always signals low quality
The market becomes an oligopoly because firms use different strategies
The outcome depends on whether consumers value the lower price more than the loss of after-sales protection
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.