The Bargaining Power of an Industry's Suppliers Is Greater When

question 42

Multiple Choice

The bargaining power of an industry's suppliers is greater when

• A) the supply industry is fragmented.
• B) switching costs are high.
• C) the industry buys in large quantities.
• D) many substitutes are available.
• E) firms in the industry can threaten backward vertical integration.

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Definitions:

Variable Cost

Costs that vary directly with the level of production or with the volume of output.

Fixed Cost

Expenses that do not change with the level of production or sales volume, such as rent, salaries, and insurance premiums.

Contribution Margin Technique

A method used to evaluate how sales affect net income or profits, calculated as sales revenue minus variable costs.

Net Income (Loss)

The total profit or loss a company generates in a specific period after all expenses, taxes, and costs have been deducted from total revenue.