Which of the Following Is Not a Good Example of a Substitute

question 78

Multiple Choice

Which of the following is not a good example of a substitute product that triggers stronger competitive pressures?

• A) Artificial sweetener as a substitute for sugar
• B) Wireless phone service as a substitute for a landline telephone
• C) Coca-Cola as a substitute for Pepsi
• D) Digital cameras as substitutes for film cameras
• E) Video-on-demand services as a substitute for renting movies from a movie rental store

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Definitions:

Opportunity Cost

The cost of foregone alternatives; the value of the best alternative that is not chosen in order to pursue a certain action.

Implicit Cost

The opportunity cost associated with a firm's use of resources that it owns, which do not have a direct monetary payment but could generate income if deployed elsewhere.

Option

A financial derivative that gives the holder the right, but not the obligation, to buy or sell an asset at a specified price within a given timeframe.

Rate of Inflation

The percentage increase in the general price level of goods and services in an economy over a period of time.