Which of the Following Is NOT Descriptive of the Threat

question 22

Multiple Choice

Which of the following is NOT descriptive of the threat of substitute products or services?

• A) Substitute products appear to be different, but satisfy the same need as another product.
• B) If the cost of switching is low, substitutes may have a strong effect on an industry.
• C) Identifying substitutes is relatively easy since they look similar.
• D) Possible substitute products or services may not appear to be easily substitutable.
• E) Substitutes limit the potential returns of an industry.

---

Definitions:

Gain Recognition

The process by which gains from the sale or exchange of assets are reported for tax purposes.

Involuntary Conversion

The forced exchange of an asset for compensation, such as through eminent domain or destruction, where the proceeds may qualify for special tax treatment.

Insurance Company

A business that provides financial protection and compensation for losses in exchange for the payment of premiums.

Basis

The amount of investment in an asset for tax purposes, used to calculate gain or loss upon sale of the asset.