With the Five Forces Model, Companies Should Watch the Forces

question 202

True/False

With the Five Forces Model, companies should watch the forces in the market. If the forces are strong, competition generally increases, and if the forces are weak, competition typically decreases.

---

Definitions:

Negative Economic Profit

A situation where a firm's total revenue is less than its total costs, including opportunity costs.

Market Price

The current value at which an asset or service can be bought or sold in a competitive marketplace.

Zero Economic Profit

A situation where a firm's total revenue is exactly equal to its total costs, including opportunity costs.

Economic Profits

The excess of total revenues over total costs, including both explicit and implicit costs.