Switching Costs

question 5

Multiple Choice

Switching costs:

• A) drive early entrants out of the market.
• B) make it easy for later entrants to win business.
• C) make it difficult for later entrants to win business.
• D) give later entrants a cost advantage over early entrants.

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Definitions:

Pure Monopoly

A market structure where a single supplier provides a unique product or service with no close substitutes, controlling the entire market.

Oligopoly

A market structure characterized by a small number of firms controlling a large majority of the market share, often leading to limited competition.

Monopolistic Competitive

A market structure characterized by many firms selling products that are substitutes but differentiated from one another, leading to non-price competition.

Short Run

A period in economics during which at least one input, such as plant size, is fixed and cannot be changed by a firm.