In response to competition, a business might:

• A. Lower prices
• B. Stop advertising
• C. Increase unit costs
• D. Ignore customer needs

Answer: (A)

When facing competition, a business often uses price as a quick way to attract customers and defend market share. Lowering prices makes the product more affordable than rivals, so price-sensitive customers are more likely to buy, helping to win sales and discourage customers from switching to cheaper options. If demand responds to price changes, a smaller price can lead to a noticeable increase in quantity sold, sometimes boosting overall revenue despite thinner margins.

Stopping advertising would reduce visibility and brand awareness at a time when rivals are trying to attract customers, making it harder to compete. Increasing unit costs raises prices, which can worsen competitiveness rather than improve it. Ignoring customer needs risks losing customers to competitors who offer better value or satisfaction, especially in a competitive market.