The risk of a price war is greatest in which of the following circumstances?

Question

Quizplus · Accepted Answer

An industry characterized by falling demand, high exit barriers, and excess productive capacity creates a situation where companies are competing for a shrinking market. This leads to overproduction and excess inventory which can trigger a price war as companies attempt to maintain market share. High exit barriers also make it difficult for companies to leave the industry, increasing the pressure to reduce prices.

The Risk of a Price War Is Greatest in Which