Answer to Question #191479 in Microeconomics for melaku

Question

1.    What is the difference between real and fancied differentiation? Explain using practical examples.

Answer 1

Product distinction can be genuine or fictitious. It is true when there are minor variations in the firm's product, such as in taste whether it is a food, or in consistency, and so on. It is fanciful if the distinction is merely to draw the customer's attention rather than genuine differentiation, such as variations in packaging, design etc.