The Fact That Barriers to Entry Are Low in Competitive

question 38

Multiple Choice

The fact that barriers to entry are low in competitive price-searcher markets means that if current firms are making economic losses,

• A) these losses will remain in the long run because firms will not exit the market.
• B) some current firms will exit the market, causing the demand curves that face the remaining firms to increase.
• C) new firms will enter the market, causing the demand curves that face the existing firms to decrease.
• D) new firms will enter the market, causing no change in the demand curves that face the existing firms in the market.

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Definitions:

College Expenses

The costs associated with attending college, including tuition, fees, books, and living expenses.

Lodging

Accommodation in hotels, motels, or any other establishment that provides a place to stay for a short period.

Rational Choice

A theory in economics and sociology that suggests individuals choose the option that provides the highest level of satisfaction, assuming the availability of information and a clear preference set.

Opportunity Cost

The effect of spurning potential profits from various options by selecting a particular one.