Question

In: Economics

Interindustry competition means that: Group of answer choices in most industries there are usually a number...

Interindustry competition means that:
Group of answer choices
in most industries there are usually a number of firms producing identical products.
in oligopolistic industries a few large firms compete with one another in bidding down product price.
firms that sell a product at one stage of production are faced with firms that buy the product at the next stage of production.
in some markets the producers of a particular product might face competition from products produced by other industries.

Solutions

Expert Solution

Answer. (d) in some markets the producers of a particular product might face competition from products produced by other industries.

Explanation: When a situation of business rivalry arises between two companies/firms which are from different industries, then it is termed as interindustry competition. A very common example is given in which a country's government puts out advertisements for production of military equipment/vehicles. Now consider two industries, one automobile and another aviation. Although these two industries are fundamentally different, but their production plants, technological expertise, etc. allow them both to manufacture miitary equipment/vehicles for the government. So they would compete among themselves. They would also be willing to produce out of their regular line because government contracts would give them huge profits so a little bit spending on extra expertise would pay off. Therefore, as mentioned in the question, the producer of automobile competes with producers of aeroplanes.


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