Question

Question 1. Competitive markets are all about rivalries: A Pizza Hut restaurant introduces a new promotional advertisement "Buy two piza for $2.50; regularly costs $5.00 and get the second one free. This Ad will end will end January 30, 2019. Explain what does each of the following situation best represents and then choose you est answer? a) Producer-producer rivalry. b) Consumer-consumer rival c) Producer-consumer rivalry SHIBA 3 5 7 ENTER SHIFT CTR AL7

Answer 1

Answer : 1) a) Producer - producer rivalry : when in a market many producers exist then they compete with each other by lowering price. Because lower price attract more consumers. This situation is known as producer - producer rivalry.

b) Consumer - consumer rivalry : If the quantity of a good is limited in the market then consumers loose the negotiating opportunity with producers. Because in this situation consumers compete with each other to get the product. This situation is known as consumer - consumer rivalry.

c) Producer - consumer rivalry : Producers always try to charge high price whereas consumers always try to purchase goods at low price. For this reason a negotiation situation occur in the market between producers and consumers. This situation is known as producer - consumer rivalry.

So, the answer for given situation is option a.

Because the given market is a competitive market. Pizza hut gives a low price offer of $2.50 for two pizzas which normally costs $5 and second one is free. This means that here the producer of pizza hut is competing with other producers to attract consumers. The situation where producers competitive with each other is called "producer - producer rivalry". Therefore, option a is the correct answer.