Which of the Following Is Not an Exit Barrier for Firms

question 1

Multiple Choice

Which of the following is not an exit barrier for firms in an industry?

• A)Sunk costs
• B)Labor agreements or commitments to purchase raw materials
• C)Obligations to input suppliers
• D)Excess capacity
• E)Government restrictions

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Definitions:

Price Floor

A government or regulatory-imposed minimum price for a particular good or service, above the equilibrium price.

Government Purchases

Expenditures by government entities on goods and services that are part of government consumption or investment.

Producer Surplus

The difference between the amount producers receive from selling a good or service and the minimum amount they would accept for that good or service.

Price Floor

A price floor is a government- or authority-set minimum price below which a particular good or service cannot legally be sold, aiming to prevent prices from falling too low.