Suppliers Are More Likely to Be Powerful Relative to the Firms

question 70

Multiple Choice

Suppliers are more likely to be powerful relative to the firms to which they sell their goods and services if:

• A) differentiation among existing suppliers is high.
• B) the suppliers' industry is highly fragmented.
• C) existing suppliers lack economies of scale.
• D) the suppliers' industry is dominated by a few companies.
• E) cost advantages independent of size are negligible.

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Definitions:

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, with elasticity greater or less than one indicating the degree of responsiveness.

Quantity Demanded

The specific amount of a good or service consumers are willing to buy at a given price, holding other factors constant.

Elasticity Coefficient

A measure that quantifies the responsiveness of the quantity demanded or supplied of a good to a change in one of its determinants, such as price.

Relative Change

The measure of change in a variable relative to its initial value, often expressed as a percentage.