Which of the Following Is True in Industries Characterized by a High

question 31

Multiple Choice

Which of the following is true in industries characterized by a high degree of product differentiation?

• A)Selling costs are likely to be low relative to production costs.
• B)Firms are under pressure to produce at maximum capacity.
• C)Firms are not likely to emphasize price competition.
• D)Relatively small firms are likely to be extremely rare.
• E)Firms are likely to emphasize price competition.

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Definitions:

Fixed Cost

Fixed cost refers to a cost that does not change with the level of output or sales in the short term, such as rent, salaries, or loan payments.

Sunk Cost

Costs that have already been incurred and cannot be recovered or altered.

Incremental Revenues

Additional income received from a particular action or decision, beyond what would have been received without it.

Direct Material

Raw materials that are directly traceable and allocable to the production of goods or services.