Firms Work to Diversify

question 44

Multiple Choice

Firms work to diversify.All of the following are diversification methods that firms use EXCEPT:

• A)Firms seek to expand the customer base.
• B)Firms seek to obtain raw materials from a number of suppliers.
• C)Firms seek to isolate their product by selling to a single niche market.
• D)Firms seek to produce more than one product.

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Definitions:

Pricing Strategies

Plans or methods used by businesses to set prices for their products or services in order to maximize profitability and market share.

Pure Competition

A market structure characterized by a large number of small firms, a homogeneous product, and free entry and exit which leads to price taking behavior.

Barriers To Entry

Elements that obstruct or impede the ability of businesses to penetrate a particular market or sector.

Elasticity Coefficient

The elasticity coefficient measures how much the quantity demanded or supplied of a good responds to a change in one of its determinants, such as price, income, or the price of related goods.