Which of the Following Features About a Buyer Indicates That

question 4

Multiple Choice

Which of the following features about a buyer indicates that the buyer has high bargaining power?

• A) when the buyer cannot credibly threaten to backwardly integrate into the industry
• B) when the buyer cannot purchase specific products from other sellers
• C) when the buyer faces high switching costs
• D) when the buyer operates in an industry where products are undifferentiated

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Definitions:

Fixed Costs

Fixed costs are those business expenses that remain constant regardless of the level of production or sales, such as rent, salaries, and insurance.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the proportion of fixed to variable costs in a company's cost structure.

Break-even Point

The point at which total revenues equal total costs, resulting in neither profit nor loss.

Variable Cost

Costs that vary depending on the amount of goods produced or the scale of operations in a business.