06.07.2022 - 16:28

Home Value Inc., Max Cart Inc., and Nice Necessities Inc. are three consumer-product retailing companies. Their products consist primarily of day-to-day items that are easy to imitate and sell. All three companies use the same resources and capabilities i

Question:

Home Value Inc., Max Cart Inc., and Nice Necessities Inc. are three consumer-product retailing companies. Their products consist primarily of day-to-day items that are easy to imitate and sell. All three companies use the same resources and capabilities in the production and distribution of their products. Which of the following is an implication of the market condition indicated in this scenario:

A. Resource immobility of the firms will be low,

B. The industry structure will be far from perfect competition,

C. Barriers to entry within the industry will be high,

D. Any advantage that one firm has will be short-lived.

Answers (1)
  • Freeda
    April 5, 2023 в 16:45
    B. The industry structure will be far from perfect competition. This is because if multiple companies are producing and distributing similar products using the same resources and capabilities, it creates a competitive market. However, if the market structure was closer to perfect competition, then there would be many small companies competing against each other with no one having a significant advantage. In this scenario, it is likely that a few larger companies, such as Home Value Inc., Max Cart Inc., and Nice Necessities Inc., have established themselves as the dominant players in the market, creating an oligopoly or monopolistic competition structure. This suggests that the industry is not open to new entrants easily, and any newcomers would have to overcome the substantial barriers to entry. Additionally, any advantage that one firm may have will likely be short-lived due to the intense competition, leading to constant innovation and improvement in the products and services offered by all players in the industry.
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