Which of the Following Is Most Likely an Implication of New

question 110

Multiple Choice

Which of the following is most likely an implication of new firms entering an industry?

• A) The bargaining power of buyers will reduce.
• B) The industry's overall profit potential and sales will increase.
• C) The rivalry among existing competitors will reduce.
• D) The incumbent firms will spend more to satisfy their existing customers.

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Definitions:

EOQ Model

The Economic Order Quantity model is used to determine the optimal order size to minimize the total inventory costs.

Accounts Receivable

Amounts outstanding from customers to a company for goods or services provided but still unpaid.

Sales on Credit

Sales on Credit refer to transactions where the buyer is allowed to pay for goods or services at a later date, making the sale based on trust that payment will be made in the future.

Lockbox Plan

A cash management tool in which incoming cheques for a firm are sent to post office boxes rather than to corporate headquarters. A local bank will collect the contents of the lockbox and deposit the cheques into the company’s local account.