Which of the Following Is True If the Threat from Substitutes

question 8

Multiple Choice

Which of the following is true if the threat from substitutes is strong?

• A)Competitors' products are of a lower quality.
• B)Competitors are yet to overcome the entry barriers.
• C)Customers are likely to switch to competitors' products.
• D)Prices of competitors' products are higher.

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Definitions:

FIFO

"First-In, First-Out," an inventory valuation method assuming goods are sold in the order they are acquired, affecting the cost of goods sold and ending inventory.

Average-cost Method

An inventory costing method that calculates the cost of goods sold and ending inventory based on the average cost of all similar items available during the period.

Cost of Goods Sold

The specific costs incurred during the manufacturing of a company's merchandise for sale.

Inventory

The raw materials, work-in-process products, and finished goods considered to be the portion of a business's assets that are ready or will be ready for sale.