Merv's hardware, a small family-owned store in middletown, sells a 100-pack of garnet sandpaper for $35
the home shoppe, a large retail hardware chain in neighboring morristown, sells the same product for $29
based on this scenario, what would you expect merv's immediate response to be?
a
merv will remove his advertisements and rely on word of mouth.
b
merv will reduce his price to respond to the price competition from the homeshoppe.
c
the homeshoppe will initiate non-price competition with merv.
d
the homeshoppe will raise its price to respond to the price compet

The correct answer is B. Merv will reduce his price to respond to the price competition from the HomeShoppe.

This is because, otherwise, it could not compete against the prices of a large retail hardware chain and its advertising methods.

Lowering the price, Merv could keep its stable base of clients, which would go to HomeShoppe if there was a difference of 6 dollars for the same product.

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