John Petersen Is Thinking About Starting a Firm in the Specialty

question 53

Multiple Choice

John Petersen is thinking about starting a firm in the specialty chemical industry. In the industry analysis John has been conducting, one thing he has noticed is that the specialty chemical industry is characterized by the following factors: high supplier concentration, high switching costs for buyers when they switch from one supplier to another, and no attractive substitutes for the products that most of the suppliers provide. These factors concern John because they tell him that the profitability of the specialty chemical industry is suppressed by the:

• A) threat of substitutes
• B) bargaining power of buyers
• C) rivalry among existing firms
• D) bargaining power of suppliers
• E) threat of new entrants

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Definitions:

Language-like Skills

The abilities related to the use and understanding of complex systems of communication that resemble human language, including syntax, grammar, and the conveyance of abstract concepts.

Grammatical Rules

Guidelines in a language that dictate how words and phrases should be structured to convey clear and correct meaning.

Functional Fixedness

A mental shortcut that restricts an individual to employing an item solely in its conventional manner, obstructing innovative thinking and the ability to solve problems.

Availability Heuristic

A cognitive bias where people judge the likelihood of events based on how easily examples come to mind.