Which of the Following Is a Disadvantage of First Movers

question 66

Multiple Choice

Which of the following is a disadvantage of first movers?

• A) They cannot establish significant brand loyalty due to high costs.
• B) They cannot create switching costs for their customers, thus making it difficult to enter the market.
• C) They decrease sales volume compared to their rivals, and thus operate at a loss.
• D) They run the risk of building the wrong resources and capabilities.
• E) They do not have the power to exploit network effects and positive feedback loops.

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Definitions:

Unlimited Wants

The economic concept that humans have insatiable desires for goods and services, which exceeds the resources available to satisfy them.

Individuals

Single human beings, considered separately from society or as distinct entities with personal interests and responsibilities.

Fallacy of Composition

The error of assuming that what is true of a part is necessarily true of the whole.

Prosperity

A state of economic well-being characterized by high levels of income, employment, and production.