Which of the Following Is Not Descriptive of the Threat

question 45

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.

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Definitions:

Tax

A compulsory financial charge or levy imposed by a government on individuals or entities to fund public expenditures.

Negative Externality

Occurs when a decision by an individual or firm results in unwanted negative effects on another party not involved in the decision.

MSC (Marginal Social Cost)

The total cost to society of producing an additional unit of a good or service, including both private costs and any externalities.

Positive Externality

A benefit received by individuals or society at large from an economic transaction in which they were not directly involved.