Your Boss, David Ferrell, Has Asked You to Analyze the Soft

question 191

Multiple Choice

Your boss, David Ferrell, has asked you to analyze the soft drink industry using Porter's Five Forces Model. Which of the following represents a threat of a new entrant in the soft drink industry?

• A) Pepsi requires stores that carry Pepsi products to commit to minimum orders of 1,000 cases.
• B) Walmart negotiates a lower cost per bottle from Coke in exchange for premium shelf space in every Walmart store.
• C) Zevia Natural Diet Soda begins selling directly over the Internet.
• D) Vitamin water, fruit juice, and coffee are all beverage options available to consumers.

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Definitions:

Downsloping

A characteristic of certain economic graphs, such as the demand curve, indicating that as price decreases, quantity demanded increases.

Purely Competitive Firm

A business that operates in a market where there are many buyers and sellers, and it has no control over the market price of its product.

Economic Profit

The difference between a firm’s total revenue and its opportunity costs (including both explicit and implicit).

Long-run Average Total Cost

The total cost per unit of output when all factors of production are variable, and economies of scale have been achieved.