Barriers to Entry

question 98

Multiple Choice

Barriers to entry

• A) measure the ability of firms to set the price for a good.
• B) do not exist for monopolies.
• C) always lead to profits.
• D) restrict the entry of new firms into the market.
• E) exist for perfectly competitive firms.

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Definitions:

Differential Cost

is the change in a company's cost of producing goods or services under two different action alternatives, essentially the cost difference between two choices.

Unused Capacity

The available but not utilized production ability of a company which could potentially generate revenue if employed.

Unit Cost

The cost incurred to produce, store, or acquire one unit of a product, calculated by dividing the total cost by the number of units.

Differential Cost

The difference in cost between two alternative decisions or scenarios.