Final answer:
Option (A), The correct statement about substitutes is that they can ultimately replace an industry's products or services. Substitutes affect demand for existing products, for example, cheaper tablets lead to reduced demand for laptops.
Step-by-step explanation:
The statement regarding substitutes that is accurate is A) In the extreme, substitutes can ultimately replace an industry's products or services. Substitutes are goods or services that can be used in place of another. As substitutes become more widely available and affordable, demand for the original product tends to decrease. This is because a lower price for a substitute typically leads to an increased demand for it and a corresponding decrease in demand for the product it replaces.
For instance, with the increasing availability and declining prices of tablet computers, consumers have opted for these devices over laptops. This shift in consumer preference is illustrated by a leftward shift in the demand curve for laptops. Businesses and firms must adapt to the presence of substitutes, as they can significantly impact market dynamics and the profitability of the existing products.
It is also noteworthy that when a firm produces a product with no close substitutes, it may hold a monopolistic position in that market. Conversely, when there are several similar options available from competing firms, the market is more competitive, and the firm does not possess monopoly power.