Which of the Following Statements Is True of First Movers

question 12

Multiple Choice

Which of the following statements is true of first movers relative to early followers and late entrants?

• A) Cost of developing necessary production processes and complementary goods is lower for first movers.
• B) First movers are in a better position to exploit buyer switching costs and also to reap increasing returns advantages.
• C) First movers, being incumbents, have greater ability than later entrants to respond to changes in the industry environment and adopt newer production processes.
• D) First movers fail to capture scarce resources such as key locations, government permits, access to distribution channels, and relationships with suppliers.

Evaluate external business offers considering capacity, incremental costs, and potential strategic implications.

Understand the effects of government licensing and monopoly power on market efficiency and consumer choice.

Recognize the challenges regulators face due to lack of information when imposing price regulation on monopolies.

Comprehend the incentives and behaviors of monopolists regarding efficiency, resource allocation, and pricing.

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Definitions:

Direct Materials

Ingredients essential to the production process that can be directly linked to the creation of a final product and are a fundamental component of it.

Cost Accounting System

A cost accounting system is a method or process used by businesses to track, record, and analyze costs associated with their production operations, aiming to optimize efficiency and profitability.

Manufacturing Cost Accounts

Accounts used to track the costs associated with producing goods, including direct labor, direct materials, and manufacturing overhead.

Overapplied Overhead

A situation in which overhead assigned to work in process is greater than the overhead incurred.