The basic premise of industry analysis is that:
A)Most industries lie on a spectrum between perfect competition at one end and monopoly at the other
B)The level of profitability within an industry is determined by the systematic influence of the industry structure
C)Industry profitability depends upon the interaction among competing firms
D)Technology and consumer demand are the basic forces that shape industry structure

Question

Quizplus · Accepted Answer

Industry analysis assumes that the profitability of an industry is determined by the industry structure, including factors like the number and size of competitors, barriers to entry, and the bargaining power of suppliers and buyers. This is because these factors influence the amount of competition in the industry, which in turn affects prices, costs, and profits. While technology and consumer demand are important drivers of industry change, they are not the only factors that determine industry structure and profitability, which is why B is the best answer. A, C, and D are incorrect because they do not provide a comprehensive explanation of how industry analysis works. While A is true to some extent, it is not the main point of industry analysis. C is also partially true, but it is too narrow to capture the full scope of industry analysis. D is incorrect because it overemphasizes the role of technology and consumer demand, which are only two of many factors that shape industry structure.

The Basic Premise of Industry Analysis Is That