When the size of the total market is shrinking, competition tends to intensify in a declining industry and profit rates tend to fall.

Question

Quizplus · Accepted Answer

When the market size is shrinking, there are fewer opportunities for growth, and companies must compete for a smaller share of the pie, which tends to intensify competition. This can result in price wars and lower profit margins for companies in the declining industry.

When the Size of the Total Market Is Shrinking, Competition