Fixed Costs of Entry Create an Advantage for Potential Entrants

question 72

True/False

Fixed costs of entry create an advantage for potential entrants since incumbents have already made these expenditures while potential entrants can avoid these costs.

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Definitions:

Deregulation

The process of reducing or eliminating government controls and restrictions in an industry to enhance efficiency and competition.

FDIC

The Federal Deposit Insurance Corporation, a U.S. government agency that provides insurance protection to depositors in US banks.

Mortgage-Backed Security

A claim on payments made on the many mortgages bundled into this financial instrument.

Monthly Payments

Regular payments made monthly, often in the context of loans or mortgages, covering interest and possibly part of the principal.