Question

Which of the following tend to result from strong competitive rivalry?

Multiple choice question.
limits to the industry's profit potential
less product differentiation
a reduction in the threat of substitutes
industry-wide price increases

Answer 1

Strong competitive rivalry can result in limits to the industry's profit potential, less product differentiation, a reduction in the threat of substitutes, or industry-wide price increases.

Step-by-step explanation:

Strong competitive rivalry can result in several outcomes, including:

1. Limits to the industry's profit potential - when firms compete fiercely, they may drive down prices and reduce profit margins for all players in the industry.
2. Less product differentiation - in a highly competitive market, firms may struggle to differentiate their products from competitors, resulting in a lack of unique features or benefits.
3. A reduction in the threat of substitutes - strong competition often leads firms to continuously innovate and improve their products to ward off potential substitutes.
4. Industry-wide price increases - in some cases, if firms collude or engage in price-fixing behavior, they may collectively raise prices to increase profits.