Question

In: Economics

Natural gas providers, like Scana Energy, can create switching costs for its product. This means, a....

Natural gas providers, like Scana Energy, can create switching costs for its product. This means,

a. it is difficult or costly for customers to switch to another seller of the product.

b.it increases its costs by producing several versions of the product so customers can switch between versions.

c.customers will find it more costly to stay with the company than to switch to another seller.

d.it is difficult or costly for the seller to switch to producing a different product.

Solutions

Expert Solution

Answer - Option A

It is difficult or costly for the consumers to switch to another seller of the product.

It is called the switching cost. The purchasing of product from other seller is restricted , hence it creates the barrier to switching from one seller to other. If the consumer does so , he will have to pay the higher cost. Switching cost are to be borne by customer and not the seller. Thus all options except A are wrong.

Rahul Sunny answered 2 years ago
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