Question

What factor is most likely to increase the bargaining power of buyers?

a. Switching costs are high.
b. Purchases represent a small percentage of the buyer's costs.
c. Buyers do not have access to full information on supply prices and terms.
d. Buyer profit margins are low.

What does the term "economies of scale" describe?

a. The expense incurred by customers when moving from one provider or product to another.
b. The heavy development and advertising costs necessary to establish the uniqueness of competitors' products.
c. A situation whereby a business can produce its goods or services at a lower cost because they are producing high volumes.
d. The existence of a well-established, dominant player or players in the industry.

Which factors increase the bargaining power of suppliers?

I. Dominance by few suppliers.
II. Provision of value-added inputs.
III. Widely available substitute inputs.
IV. Suppliers' ability to integrate forward.

I, II, IV only.
I and III only.
III and IV only.
II, III and IV only.

• Question (11)

In what industry will a business most likely need to compete very aggressively to drive high levels of sales?

Industry with low fixed costs.
Industry with no fixed costs.
Industry with high fixed costs.
Industry with medium fixed costs.

• Question (12)

When one industry develops a functional substitute for a product being produced in another industry, competition in that other industry normally declines.

This is a single choice question. Selections are automatically selected as you use arrow to move.

FALSE
TRUE

• Question (13)

A business that has many small clients typically dictates the terms of the relationship with individual buyers.

FALSE
TRUE

Answer 1

1) Buyer bargaining power is stronger when buyers earn low profits or low income. This induces them to bargain more and are price sensitive as compared to those with high income. Hence the answer is option-(d).

2) Economies of scale refers to the benefits from large scale production and it occurs with increasing returns to scale. It is a situation whereby a business can produce its goods or services at a lower cost because they are producing high volumes. Hence the answer is option (c).