When Firms Earn Below Normal Rates of Return

question 309

Multiple Choice

When firms earn below normal rates of return

• A) they raise their prices to increase their profits.
• B) they tend to stay in the industry in anticipation of other firms leaving the industry.
• C) they tend to leave the industry and seek profits elsewhere.
• D) they are still breaking even economically.

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Definitions:

Preemptive Compliance

Actions taken in advance to comply with potential regulations or guidelines to mitigate risk or to gain a competitive advantage.

Demarketing

A strategy used to reduce demand for a product either temporarily or permanently, often due to supply constraints or strategic decisions.

Marketing Philanthropy

The act of companies engaging in charitable activities or donations as part of their marketing strategy to enhance reputation and foster goodwill.

Cause Marketing

A strategy where businesses and charities form a partnership to market an image, product, or service for mutual benefit.