What are positive consequences of competition between firms?

This is true. Companies in a competitive situation seek to make the production process more efficient to be able to lower prices and to attract more customers.

This is true. First, as prices in a competitive market are very low, one way for firms to make profits is by delivering a better product. To do so the firms has to engage in product innovation. Second, by investing in process innovation the firm might be able to reduce costs which in turn helps to further decrease the price.

This is correct. To attract more customers (which in a highly competitive situation is essential) companies need to increase their product portfolio.