According to the five forces framework, sustainable industry profits depend upon:
A. the power of input suppliers.
B. industry entry conditions.
C. the degree of industry rivalry.
D. All of the statements associated with this question are correct.
Answer: D
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Which of the following statements is true?
A) Price controls strengthen the functioning of the invisible hand. B) Price controls weaken the functioning of the invisible hand. C) Price controls always benefit buyers and make sellers worse off. D) Price controls always benefit sellers and make buyers worse off.
Suppose the output gap is zero, and policy makers wish to reduce the inflation rate from 10 percent to 5 percent. Which of these policies seems best?
A) contractionary policies to reduce output at least 5 percent below potential output B) a convincing declaration of the inflation rate target, so that expected inflation falls to 5 percent C) no policy action; inflation will fall on its own, eventually D) no policy action; inflation will converge to its long-run rate, regardless of policy E) price and wage controls to counteract their stickiness