Question

In general, as long as the number of firms that possess a particular valuable resource or capability is less than the number of firms needed to generate perfect competition dynamics in an industry, that resource or capability can be considered ________ and a potential source of competitive advantage.

A) valuable
B) rare
C) inimitable
D) un-substitutable

Answer 1

A resource or capability is considered rare and a potential source of competitive advantage if fewer firms own it than the number needed for perfect competition in the industry.Hence, the correct answer is option B.

Step-by-step explanation:

In general, as long as the number of firms that possess a particular valuable resource or capability is less than the number of firms needed to generate perfect competition dynamics in an industry, that resource or capability can be considered rare and a potential source of competitive advantage. This idea is based on the resource-based view of the firm, which suggests that a firm can achieve a competitive advantage by possessing resources that are valuable, rare, inimitable, and non-substitutable. Firms need to have resources that are not common among all competitors to be able to stand out and have a competitive edge in the market.