Multiple Choice
Because perfectly competitive firms are price takers, the marginal revenue is equal to the market:
84
views
3. The Market Forces of Supply and Demand
Competitive Markets
Multiple Choice
Competitive pressures stemming from buyer bargaining power tend to be weaker when:
A
buyers can easily switch to substitute products
B
buyers are highly concentrated and purchase in bulk
C
buyers purchase small quantities and are fragmented
D
buyers have many alternative suppliers to choose from
Verified step by step guidance1
Understand the concept of buyer bargaining power: It refers to the ability of buyers to influence the price and terms of purchase. When buyers have strong bargaining power, they can demand lower prices or better quality.
Analyze the effect of buyer concentration and purchase size: When buyers are highly concentrated and purchase in bulk, they have more leverage to negotiate better deals, increasing their bargaining power.
Consider the impact of product substitutability and supplier alternatives: If buyers can easily switch to substitute products or have many alternative suppliers, their bargaining power increases because they can threaten to switch.
Identify conditions that weaken buyer bargaining power: When buyers purchase small quantities and are fragmented, no single buyer has enough influence to affect prices or terms significantly, thus reducing their bargaining power.
Conclude that buyer bargaining power tends to be weaker when buyers are fragmented and purchase small quantities, as this limits their ability to negotiate or influence suppliers.
Related Videos
Related Practice
