The Bargaining Leverage of Suppliers Is Greater When

question 50

Multiple Choice

The bargaining leverage of suppliers is greater when

• A)only a small number of suppliers exist and when it is difficult for industry members to switch to attractive substitutes.
• B)industry members incur low costs in switching their purchases from one supplier to another.
• C)industry members purchase in large quantities and thus are important customers of the suppliers.
• D)it makes good economic sense for industry members to vertically integrate backward.
• E)the supplier industry is composed of a large number of relatively small suppliers.

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Definitions:

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life evenly.

Residual Value

The estimated amount that an asset is expected to realize at the end of its useful life, after deducting expected costs of disposal.

Mine

In a business context, mine refers to an excavation in the earth for extracting minerals or metals, a significant source of resources and industrial materials.

Depletion

The allocation of the cost of natural resources over the period they are consumed or sold.