Practice Quiz

AP Microeconomics

Category - Microeconomics

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Mike and Fae both work for different coffee companies. All of their competitors are other coffee companies and the only real competitive product is a different kind of coffee. What would the correct term be for the difference between the kinds of coffee on the market?
  1. Product differentiation
  2. Monopoly product
  3. Dominant product
  4. Strategic collusion
Explanation
Answer - A - Product differentiation is the correct term for the difference among various products on the market.

Key Takeaway: Product differentiation is the process of distinguishing a given product from others on the market to make it more attractive to the market’s consumers. Often, product differentiation can be a major competitive advantage, creating a niche market for the business.
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