Which of the Following Statements Is True About Rivalry in the Context

question 21

Multiple Choice

Which of the following statements is true about rivalry in the context of established companies?

• A) It significantly reduces the costs of established companies.
• B) It squeezes profits out of an industry.
• C) It enables companies to lower their spending on non-price-competitive strategies.
• D) It forces companies to reduce prices when it is less intense.
• E) It is unaffected by the demand conditions of an industry.

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Definitions:

Average Fixed Cost

The fixed costs of production (costs that do not change with the level of output) divided by the quantity of output produced.

Output

The total quantity of goods or services produced by a firm or economy over a specific period.

Marginal Product

Refers to the additional output that is produced by adding one more unit of a specific input, assuming all other inputs are held constant.

Total Product

The total amount of output that a firm produces, usually measured over a certain time period, using all available inputs.