Which One of the Following Does Not Intensify the Competitive

question 118

Multiple Choice

Which one of the following does not intensify the competitive pressures associated with the threat of entry?

• A) When incumbent firms are unable or unwilling to launch competitive initiatives to strongly contest the entry of newcomers
• B) When industry members are struggling to earn good profits
• C) When entry barriers are relatively low and buyer demand for the product is growing fairly rapidly
• D) When existing industry members are looking to expand their market reach by entering product segments or geographic areas where they currently do not have a presence
• E) When newcomers can expect to earn attractive profits and a number of outsiders have the expertise and resources to hurdle whatever entry barriers exist

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Definitions:

Free-Rider Problem

A situation where individuals consume a public good without contributing to its cost, leading to underprovision or overuse.

Coase Theorem

A principle that asserts that if property rights are clearly defined and transaction costs are low, private negotiations will lead to the efficient resolution of disputes regardless of initial distribution of rights.

Property Rights

Legal rights that determine the ownership and use of resources such as land, buildings, and intellectual property.

Negatively Affects

To cause harm or reduction in quality, performance, or value.