Rivalry among existing competitors is higher when
A) fixed costs are low and marginal costs are high.
B) exit barriers are low.
C) industry growth is slow.
D) the product is not perishable.

Question

Quizplus · Accepted Answer

When industry growth is slow, existing competitors have no choice but to compete fiercely for market share, leading to higher rivalry. Lower fixed costs and higher marginal costs may lead to lower prices and greater competition, but it does not necessarily cause higher rivalry. Exit barriers are irrelevant in this context, and the perishability of the product has no bearing on the level of rivalry.

Rivalry Among Existing Competitors Is Higher When