For a Business Operating Within a Specific Industry, the Bargaining

question 32

Multiple Choice

For a business operating within a specific industry, the bargaining power of suppliers is increased when ______.

• A)the cost of switching suppliers is high
• B)there are many substitutes
• C)suppliers cannot threaten forward integration
• D)the supplier's product is only a small part of the buyer's value added

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Definitions:

OPEC

The Organization of Petroleum Exporting Countries, an intergovernmental organization of oil-producing countries that aims to manage the supply of oil to stabilize prices and ensure steady earnings.

Price Ceiling

A government-imposed maximum price that can be charged for a good or service, intended to protect consumers from high prices.

Market Demand

The aggregate of a good or service that each consumer in a market is eager and qualified to purchase at differing prices.

Binding

A situation where a restriction, such as a price ceiling or floor, actually affects the market outcome because it is set above or below the equilibrium price.