In which of the following circumstances is competitive rivalry between firms likely to be high?

Competitive rivalry between firms is heightened in scenarios where the market is growing slowly or not at all. This occurs because, in a stagnant market, companies must compete more aggressively for limited available sales. Each firm's market share is heavily contested, leading to intensified efforts to attract customers, often resulting in price wars, increased marketing expenditures, or innovation to differentiate their offerings.

In a growing market, firms may enjoy greater opportunities for sales without resorting to competing directly against one another for a share of a fixed amount of demand. In contrast, when the market is not growing, the available customer base does not expand, forcing competitors to vie for the same customers. This escalation in rivalry can manifest in various ways, including improved customer service, promotional activities, and product enhancements to capture the attention of potential buyers.

The other circumstances are conducive to lower competitive rivalry; for instance, low costs for leaving the industry can facilitate the exit of weaker competitors, thereby reducing rivalry. Difficulty for buyers to switch between firms may also lead to less competition, as firms can maintain customer loyalty without as much pressure to engage in aggressive tactics. Additionally, when there are few firms in the marketplace, the competition is naturally less intense, as each company has a significant share of the market and can operate