QCE Unit 4 Topic 1 Competitive activity

Obstacles which potential newcomers would encounter when entering a market are called:

• Economies of scale

• Mobility barriers

• Buying switching costs

• Barriers to entry

Which of the following is NOT an element of Porter's Five Forces Model?

• The firm's macroeconomic environment

• The bargaining power of suppliers

• The firm's existing competition

• The potential competition from new entrants

Perfect competition occurs in a market where there are too many firms each selling:

• A capital intensive product

• An identical product

• A competitive product

• A similar product

In the long run, if a business product's price is less than long-run average costs, then the firm should:

• Increase production levels

• Reduce production levels

• Form a cartel with other producers

• Close down

Reasons for a business failing to thrive include:

• The owner failing to plan adequately

• Overspending and/or over-expansion

• A lack of customers

• All of the above

The bargaining power of suppliers will be high when:

• Suppliers threaten to integrate forward into the industry

• The industry is a key customer group to the supplier

• There are few buyers and many dominant suppliers

• The industry is a key customer group to the suppliers

To achieve more market power, firms can:

• Raise their profit margin on prices

• Differentiate their products from their rival's products

• Lobby the government to eliminate barriers to entry

• Reduce their costs of production