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ACCA Applied Knowledge · Business and Technology · Technological factors

A music publisher finds that customers now stream songs instead of buying CDs, and prices per listen are far lower than CD prices. Which description best fits the effect of technology on its products?

Streaming is a technological substitute that satisfies the same need more cheaply and conveniently, so demand for the physical CD falls. It does not raise switching costs, strengthen supplier bargaining power or prolong the maturity of CDs.

  1. ATechnology has created a substitute that reduces demand for the physical productCorrect
  2. BTechnology has raised switching costs for customers
  3. CTechnology has increased the publisher's bargaining power over suppliers
  4. DTechnology has extended the maturity stage of CDs

Explanation

Streaming is a technological substitute that meets the same need at lower cost and convenience, eroding demand for CDs. Streaming typically lowers switching costs, and the scenario says nothing about supplier power or extending CD maturity.

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