1. What is usually true regarding the threat of new entrants into an industry?

   	a.	Threats of new entrants help the economic performance of incumbent firms.
   	b.	Strong barriers to entry increase the threat of new entrants to the industry.
   	c.	The scale, brands, and expertise of incumbent firms can reduce the threat of new entrants.
   	d.	Governments never play any role in encouraging or discouraging new entrants.

1. What situation is closest to Sull's definition of "active inertia"?

   	a.	Firms do not recognize the threat posed by potential substitutes for their products.
   	b.	Firms are constrained by existing systems in their reaction to potential substitutes.
   	c.	Firms effectively nullify the threat posed by potential substitutes of their products.
   	d.	Firms successfully launch potential substitutes of their existing products.