Increased competition between producers of a good may lead to
A. A decrease in profit
B. An increase in price
C. A drop in demand
D. A rise in taxes
A. A decrease in profit
Increased competition between producers of a good may lead to:
A. A decrease in profit: This is a likely outcome of increased competition because producers may have to lower their prices to attract customers, leading to reduced profit margins.
B. An increase in price: This is less likely to occur because increased competition usually leads to price wars and price reductions as producers try to gain a larger market share.
C. A drop in demand: This is also less likely to occur because increased competition often leads to more options for consumers, which can increase overall demand.
D. A rise in taxes: Increased competition does not directly cause a rise in taxes. Taxes are usually determined by government policies and not influenced solely by competition among producers.
Therefore, the most likely answer is A. A decrease in profit.