SELF TEST #19: Project the Direction of Future Prices and Margins

Test #1:

True or False: Even in a low-return, oversupplied industry, some new capacity will be added each year.

Test #2:

True or False: The low-cost competitor sets the industry price level.

Test #3:

True or False: Demand growth can end Hostility, but may do so only temporarily.

Test #4:

True or False: One of the symptoms of a Hostile market is high volatility on price.

Test #5:

When should a company spend time and money to develop specific forecasts of future prices?

Test #6:

What combination of factors could lead to the following statement: Senior partners in Wall Street Law firms raised their hourly rates in 1987 from $300 to $350?

Test #7:

What is Price?

Test #8:

When is Price likely to go up in a market?

Test #9:

When is Price likely to go down in a market?

Test #10:

What is Capacity Creep?

Test #11:

How much does Capacity Creep add to industry capacity every year?

Test #12:

Why are high returns a potential problem for an industry?

Test #13:

What is the practical effect of a Price?

Test #14:

The industry is consolidating with many mergers and acquisitions. Will this reduce industry capacity?

Test #15:

Why should we bother to forecast future prices?

Test #16:

What forces tend to put prices and margins under pressure?

Next: Answer Sheet