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Sample Chapter 2 Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. As noted in the Chapter 2 Opening Case, gas drilling and fracturing have dramatically increased gas reserves and may provide a substitute for other carbon dioxide producing products such as coal. This change illustrates the effect of the _____________segment of the general environment. economic political/legal technological industry

a. b. c. d.

____ 2. Which of the following is NOT an entry barrier to an industry? a. expected competitor retaliation b. economies of scale c. customer product loyalty d. bargaining power of suppliers

____ 3. Suppliers are powerful when a. satisfactory substitutes are available. b. they sell a commodity product. c. they offer a credible threat of forward integration. d. they are in a highly fragmented industry.

____ a. b. c. d.

4. The existence of high exit barriers such as ownership of specialized assets (e.g., large aircraft) in the airline industry indicates that customers are relatively weak because of the high switching costs created by frequent flyer programs. the industry is moving toward differentiation of services. the competitive rivalry in the industry is severe. the economic segment of the external environment has shifted, but airline strategies have not changed.

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____ 5. Exit barriers to a firm include all of the following EXCEPT a. generic assets. b. loyalty to employees. c. governmental concern about job loss. d. restrictive labor agreements.