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1. Many factors cause firms to overbuild, resulting in industry overcapacity. The structural factor that may lead to overbuilding is:
A. A reduction in supplier prices.
B. A shallow learning curve.
C. An absence of exit barriers.
D. The presence of a strong market leader.
“Suppliers of capital, equipment, materials, etc., face their own competitive pressures. Thus, lower supplier prices, government subsidies, favorable interest rates, and similar incentives may promote expansion by customer industries.”