Which of the Following Would Not Diminish the Risk of Entry

question 38

Multiple Choice

Which of the following would not diminish the risk of entry of potential competitors for an established company within an industry?

• A) Government prohibition of market entry in the company's industry.
• B) Consumers prefer the established company's product.
• C) Potential competitors cannot match the established company's lower cost structure.
• D) The established company does not benefit from cost reductions due to mass production of standardized products.
• E) Customers are locked into the established company's product due to the high amount of energy, time, and money it would take to switch to a new product.

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Definitions:

Monopolistic Competitor

A firm operating in a market structure where many companies sell products that are similar but not identical, leading to competition based on product differentiation.

ATC Curve

Represents the average total cost of production at different levels of output, showing how cost per unit changes with scale.

Excess Capacity

The ability of a company to produce more goods or services than currently needed, exceeding the current demand.

Profit-Maximizing

The act or process of adjusting production and operational strategies to achieve the highest possible profit margins for a business.