Certified Pennsylvania Evaluator Practice Exam

Which of the following is NOT part of the principle of Competition?

1. Higher pricing strategies

2. Market saturation

3. Increased consumer choice

4. Stability in market prices

The correct answer is: Stability in market prices

Stability in market prices is not typically considered a part of the principle of Competition. In a competitive market, prices tend to fluctuate due to the forces of supply and demand. As businesses compete for customers, they may lower their prices to attract more buyers, leading to a dynamic pricing environment. This flexibility in pricing fosters a competitive atmosphere where market participants respond to changes in competition and consumer preferences. On the other hand, the other options are integral to the principle of Competition. Higher pricing strategies may emerge when companies differentiate their products or services, allowing some to charge a premium based on perceived value. Market saturation occurs when many companies offer similar products, intensifying competition. Increased consumer choice is a direct outcome of competition, as more companies entering a market typically lead to a wider variety of products available for consumers, fostering better options and innovation. Thus, the concept of stability in market prices does not align with the fluctuations and dynamism typically associated with competitive markets.