In an industry, the profits earned by firms are determined by:
A)The overall economic situation, and Porter's five forces of competition
B)The degree of concentration of the industry
C)The existence of barriers to entry in the industry
D)The value of the product for customers, the intensity of competition, and the relative bargaining powers of producers, their suppliers and their buyers

Question

Quizplus · Accepted Answer

The profits earned by firms in an industry are mainly determined by the value of the product for customers, the intensity of competition, and the relative bargaining powers of producers, their suppliers, and their buyers. While factors such as overall economic situation, Porter's five forces of competition, degree of concentration, and barriers to entry could influence the industry's profits, they are not the main determinants.

In an Industry, the Profits Earned by Firms Are Determined