Why might competition lead to higher consumer choice?

Competition in a market typically encourages multiple firms to enter and operate in that space. As more firms enter the market, they tend to offer a wider variety of products to differentiate themselves from their competitors. This means that consumers have access to a greater range of options that cater to different preferences and needs.

In a competitive environment, businesses strive to attract customers by innovating and expanding their product offerings. They might introduce new features, variations, or entirely different products, which enhances the overall selection available to consumers. This diversity allows consumers to choose products that best meet their specific requirements, leading to an overall increase in consumer choice.

In contrast, situations where producers limit the product range, where only one producer exists, or where prices are increased do not contribute to consumer choice. Limiting the range or maintaining a monopoly reduces options, while higher prices may restrict access to certain products rather than expanding choice. Thus, the entrance of more firms providing a wider array of products is key to enhancing consumer choice in a competitive market.