Read the text on the left pane and use the clues provided to answer the questions on the right pane.
The prices you charge for your products are influenced by the costs of production and by the willingness to pay of your customers. When there are many producers selling the same product, without a significant difference in quality, the price is immediately set at the same level. Originally, this would be at a level that meets all costs and there is a profit, at least for the most efficient producers. Competition sets the market price ceiling that any product can reach. The more intense the competition, the more difficult it will be to charge a price above par.
What are the two main factors that influence the prices of products according to the text?
Quality and brand recognition
Marketing strategies and advertising campaigns
Costs of production and willingness to pay of customers
Government regulations and taxation policies
What does competition establish in terms of product pricing according to the text?
A minimum price floor for all products
A maximum price ceiling that any product can reach
Fixed prices regardless of market conditions
Unlimited freedom for producers to set prices
Product prices are solely determined by production costs, regardless of customer willingness to pay.
True
False
In a competitive market with similar product quality, prices are generally set at a level where all costs are covered and profit is ensured for efficient producers.
True
False
Intense competition makes it easier for producers to charge prices above the market ceiling.