When a Market Has Barriers to Entry

question 67

Multiple Choice

When a market has barriers to entry,

• A) then in the long run it is possible for the firms to incur economic losses.
• B) then in the long run the only possible outcome for the firms to make zero economic profit.
• C) then in the long run it might be possible for the firms to make a positive economic profit.
• D) oligopolies cannot be created.
• E) the HHI almost always falls below 1,000.

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Definitions:

Accounts Receivable Approach

A method for managing and analyzing a company's incoming payments or receivables from customers to whom it extends credit.

Monthly Interest Rate

The interest rate for a loan or financial product recalculated on a monthly basis.

Variable Cost

Expenses that change in proportion to the activity of a business such as raw materials and labor costs.

Net Present Value

A calculation that compares the present value of all cash inflows and outflows of a project or investment using a specific discount rate.