Which of the Following Is an Implication of High Exit

question 71

Multiple Choice

Which of the following is an implication of high exit barriers in an industry?

• A) The number of underperforming firms in the industry will be low.
• B) The industry will face excess capacity.
• C) The competitive pressure among existing firms will be low.
• D) The industry will be more attractive for new entrants.

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Definitions:

Monopolistic Competitor

A firm that operates in a market structure characterized by many competitors selling differentiated products.

Perfect Competitor

A firm in a market structure where it takes the prevailing market price as given and decides its output level without being able to influence the market price.

Long Run

A period in economics during which all factors of production and costs are variable, and firms can enter or exit the industry.

Monopolistic Competitor

A market structure where many firms sell products that are similar but not identical, allowing for some degree of market power in setting prices.