Lena owns a cookie bakery in a small city. There are six other bakeries that offer cookies in the city. Which of the following is NOT an example of the threat of entry that Lena faces in her local baked goods market?
A)A cookie bakery in another city might add a new location by opening a cookie bakery in Lena's city.
B)One of the six bakeries that offer cookies in the city may decide to cease cookie production in order to focus on cakes.
C)A doughnut shop in Lena's city might expand its product lines to include cookies.
D)A skilled baker who just finished culinary training might open a new cookie bakery in the city.

Question

Quizplus · Accepted Answer

Option B is not an example of a threat of entry because if one of the six bakeries that offer cookies in the city decides to cease cookie production in order to focus on cakes, it is actually reducing competition for Lena's bakery. The other options all represent potential new entrants into the market, which would increase competition for Lena's bakery.

Lena Owns a Cookie Bakery in a Small City