The inherent goal of product differentiation is to make the demand curve for a product more inelastic. This happens because increased differentiation:

A) reduces the number of perceived substitutes for a product.
B) makes the product more expensive than its competitors.
C) increases the quality of the product, making it worth the expense.
D) reduces the time and effort required to obtain the product.
E) increases the just noticeable differences among competing products.

Question

Rachel Ference · Accepted Answer

Final Answer : A, Explanation :  Increased differentiation reduces the number of perceived substitutes, making consumers less sensitive to price changes, thus making the demand curve more inelastic.

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