Which of the Following Statements Concerning the Competitive Environment Is

question 66

Multiple Choice

Which of the following statements concerning the competitive environment is true?

• A) High fixed costs encourage firms to produce at a low level of capacity, in order to minimize fixed cost per unit produced.
• B) Low current prices relative to costs in an industry indicate low barriers to entry.
• C) Substantial economies of scale do not give a current industry member an advantage over a new firm.
• D) The ability to substitute another product limits the industry's profit potential.
• E) Buyers and suppliers do not influence the profitability of an industry.