QUESTION $2$

You are a manager at BearKat Tech, a software firm. The CEO tells you that the industry as a whole has become increasingly profitable over the past five years. Based on this information, you should most likely expect

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a leveling off of profitability in the next few years and therefore you should recommend that the company cooperate with its rivals to stimulate the industry. increased competition in the future and therefore you should recommend that the company upgrade its products to slow the entry of rival companies.

$$ decreased competition in the next few years and therefore you should recommend that the company take advantage of its pricing power.

increased profitability in the future and therefore you should recommend that the company remain on its current course.