When competition within an industry is high, which of the following is most likely to be true?

When competition within an industry is high, which of the following is most likely to be true?

• A. Buyers have low bargaining power
• B. Sellers have high control over pricing
• C. Buyers have high bargaining power
• D. New entrants face low barriers to entry

Answer: (C)

When competition within an industry is high, buyers typically have high bargaining power. This is because, in a highly competitive market, numerous sellers are vying for the attention and loyalty of consumers. As a result, buyers can easily switch between providers or negotiate better pricing and terms, knowing that many substitute options are available. This dynamic empowers buyers, giving them leverage to drive costs lower or demand higher quality products and services. In contrast, if buyers had low bargaining power, they wouldn't be able to influence market prices or the conditions under which they operate as effectively. Sellers would usually have more control over pricing in less competitive environments, where fewer alternatives for consumers exist. New entrants facing low barriers to entry generally indicates a less competitive market rather than a highly competitive one, where established players dominate and make it challenging for newcomers to gain a foothold.

When competition within an industry is high, buyers typically have high bargaining power. This is because, in a highly competitive market, numerous sellers are vying for the attention and loyalty of consumers. As a result, buyers can easily switch between providers or negotiate better pricing and terms, knowing that many substitute options are available. This dynamic empowers buyers, giving them leverage to drive costs lower or demand higher quality products and services.

In contrast, if buyers had low bargaining power, they wouldn't be able to influence market prices or the conditions under which they operate as effectively. Sellers would usually have more control over pricing in less competitive environments, where fewer alternatives for consumers exist. New entrants facing low barriers to entry generally indicates a less competitive market rather than a highly competitive one, where established players dominate and make it challenging for newcomers to gain a foothold.