Chap 3: QTCL

As a rule of thumb, the stronger the five forces, the higher the industry’s profit potential, which causes the industry to become less attractive for competitors.

• True

• False

A key feature of an oligopoly is that competing firms behave interdependently with each other.

• True

• False

For-profit businesses operating in long-standing fields such as energy and transportation usually operate in an environment of price stability.

• True

• False

Soft Mattresses Inc. wants to become the largest and most profitable mattress supplier in a three-state area. To do this, Soft should try to create the smallest possible difference between the value that its mattresses creates and the expense that the company must spend to produce the mattresses.

• True

• False

A small used tire shop faces significant potential competition because of the low capital requirements compared with business environments such as universities and laboratories.

• True

• False

Federal and regional laws prevent incumbent firms from dramatically lowering prices or otherwise retaliating when a new entrant joins an industry.

• True

• False

Because competitors in oligopolistic industries are so interdependent, it is especially important for managers in those firms to monitor and respond to changes their competitors make.

• True

• False

A video-streaming service provider such as Amazon Prime is a complement to a manufacturer of streaming video devices such as Roku and the Amazon Firestick.

• True

• False

A company that owns failing movie theaters could leverage existing assets by turning the buildings into performance spaces and conference sites.

• True

• False

When smartphone manufacturers began including cameras and voice recorders in their products, that was an example of industry convergence.

• True

• False