If a Firm Competes in a Capital-Intensive Industry with Excess

question 50

Multiple Choice

If a firm competes in a capital-intensive industry with excess capacity,all of the following are true except:

• A) price increases will be less likely.
• B) price increases will be more likely.
• C) companies in competitive industries face high exit barriers.
• D) companies in competitive industries may experience future price decreases.

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Definitions:

Customer Deposits

Funds paid in advance by customers for goods or services that have yet to be delivered or performed.

Chapter 7 Bankruptcy

A form of bankruptcy in the United States that involves liquidating the debtor's assets to pay off as much debt as possible, with the remaining debts being discharged.

Court Approval

A legal process where a court reviews and must sanction certain actions or decisions, often required in cases of settlements, mergers, or restructuring.

Equity Holders

Individuals or entities that own equity instruments in a corporation, such as stocks, and thus have an ownership interest in the company.