Question 35 Industries with high barriers to entry Pushes profits to normal returns Increases the likelihood of firms entering the industry Help firms sustain long term profits Increases the number of competitors
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Step 1: High barriers to entry make it difficult for new firms to enter the market. Show more…
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1) (Figure: Demand and Average Cost Curves) Which of the following diagrams represents the demand and average cost curves of a firm in the long run, given free entry and exit? Firm A Firm B Firm C Firm D 1. Firm A 2. Firm B 3. Firm C 4. Firm D 2) How can a company's research and development expenditures create a barrier to entry into its market? a. It generates larger network effects for the product. b. It prevents learning by doing, which keeps consumers from learning about new options. c. It can result in new production technologies that reduce the cost of production. d. It increases switching costs, which means companies cannot change production techniques.
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