What do barriers to entry have to do with the extent of competition, or lack thereof, in an industry?

Without barriers to entry:

A. existing firms will experience price leadership.

B. new firms will enter industries where firms are earning accounting profits.

C. new firms will enter industries where firms are earning economic profits.

D. existing firms will agree to charge the same price and not compete.

E. new firms will enter industries exhibiting diseconomies of scale.

Question

Business

Brittany

13 May, 17:10

What do barriers to entry have to do with the extent of competition, or lack thereof, in an industry?

Without barriers to entry:

A. existing firms will experience price leadership.

B. new firms will enter industries where firms are earning accounting profits.

C. new firms will enter industries where firms are earning economic profits.

D. existing firms will agree to charge the same price and not compete.

E. new firms will enter industries exhibiting diseconomies of scale.

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Answers (1)

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Devon Dickerson · Answer 1

Answer: New firms will enter industries where firms are earning economic profits.

Explanation: Barriers to new business entry into a market are the limitations a new business face when trying to enter into a market where some business already exist that sells what they desire to sell.

An example of such limitation is gaining customers from the already existing business, knowing the best price to sell their products.