When Rival Firms Compete Aggressively by Trying to Attract Competitors

question 105

Multiple Choice

When rival firms compete aggressively by trying to attract competitors' customers, this might be an indication of:

• A) an industry with low exit barriers.
• B) increasing economies of scale.
• C) slow industry growth.
• D) high bargaining power among buyers.

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Definitions:

Utilities Expense

The cost incurred from the consumption of utility services such as electricity, water, and gas in the business operations.

Income Summary Account

An account used in closing entries to gather all income and expense items, facilitating the transfer of their net balance to retained earnings.

Expense Accounts

Accounts used to record the costs incurred to operate a business, which are then matched against revenues to determine net income.

Net Income

The total profit of a company after all expenses, including taxes and operating costs, have been deducted from total revenue.