Which of the Following Statements Regarding Substitutes Is Accurate

question 61

Multiple Choice

Which of the following statements regarding substitutes is accurate?

• A) In the extreme, substitutes can ultimately replace an industry's products or services.
• B) Substitutes place a floor on the prices firms in an industry can charge and on the profits firms in an industry can earn.
• C) Substitutes rarely impact the profitability that firms in an industry can earn.
• D) The importance of substitutes in reducing the profit potential in a wide variety of industries is decreasing.

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Definitions:

Demand Deposits

Bank accounts from which deposited funds can be withdrawn at any time without any advance notice to the bank.

Treasury Bills

Short-term government securities issued at a discount from the face value and maturing in a year or less, representing a secure, low-risk investment option.

Credit Card

A Credit Card is a payment card issued by financial institutions that allows cardholders to borrow funds within a pre-approved limit for purchases or cash advances.

Price Stability

A situation in which prices in the economy do not change significantly over time, avoiding inflation and deflation.