The determining factors of how calamitous the Decline phase turns out to be are

Question

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The way capacity is dismantled as demand declines, and how dramatic is the decline in demand are the determining factors of how calamitous the Decline phase turns out to be. This is because it directly affects the cost structure of the industry and the ability of firms to remain profitable. As demand declines, firms may have to shut down capacity, lay off workers, and may not be able to cover fixed costs, leading to bankruptcy. A dramatic decline in demand exacerbates these effects, making the decline more calamitous. The other choices, such as the actions of foreign competition or how quickly the new industry can ramp up production, while important, are not the determining factors of how calamitous the Decline phase turns out to be.

The Determining Factors of How Calamitous the Decline Phase Turns