Before the fall of Communism most basic consumer products in Eastern Europe and

Question

Before the fall of Communism most basic consumer products in Eastern Europe and the Soviet Union were standardised. For example, government-run stores
would offer for sale only one type of soap or one type of toothpaste. Soviet economists often argued that this system of standardising basic consumer products avoided the waste associated with the differentiated goods and services produced in Western Europe and other countries.

Which of the following statements is true?

A. Even if there are higher costs involved with product differentiation, consumers are willing to pay for them.
B. While there are costs involved in product differentiation, there are also benefits in that consumers have avariety of versions of a product from which to choose.
C. The success of product differentiation stratergies indicates that many consumers find differentiated products preferable to standardised products.
D. All of the above statements are true,
E. Only A & B are true.

Explanation / Answer

Solution:

The true statements are as under:

1. Even if there are higher costs involved with product differentiation, consumers are willing to pay for them.

2. While there are costs involved in product differentiation, there are also benefits in that consumers have avariety of versions of a product from which to choose.

3. The success of product differentiation stratergies indicates that many consumers find differentiated products preferable to standardised products.

Hence option D "All of the above statements are true"

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