Question

Each cell of a​ product-market grid represents the possible​ ________.

A. profitability of a specific product in a market segment
B. entry strategy for a product into a specific market
C. adaptation requirement for a product
D. direct competitors for that market segment
E. intersection of a product and a market segment

Answer 1

Each cell of a product-market grid represents the intersection of a product and a market segment, crucial in understanding the dynamic nature of monopolistic competition where firms tend toward zero economic profit in the long run.

Step-by-step explanation:

Each cell of a product-market grid represents the possible intersection of a product and a market segment. This concept is particularly relevant in the context of monopolistic competition, where firms can make economic profits or losses in the short run.

However, in the long run, the market dynamics of entry and exit associated with this competition will typically drive these firms towards a zero economic profit outcome, affecting their position within the product-market grid. Moreover, the features of each market segment can influence a product's profitability, the entry strategy, the adaptation requirements, and who the direct competitors are.