New entrants to an industry are more likely when (i.e., entry barriers are low when)a.It is difficult to gain access to distribution channels.b.Economies of scale in the industry are high.c.Product differentiation in the industry is low.d.Capital requirements in the industry are high.

Which of the following conditions generally raise the barriers to entering an industry?Multiple Choicelow levels of brand loyalty on the part of customers and the presence of more than 20 rivals in the industryrapid market growth, low buyer switching costs, and weak brand preferences and customer loyaltyproduct offerings that are pretty much standardized from rival to rivalhigh capital requirements, difficulties in building a network of distributors-retailers and securing adequate space on retailers’ shelves, and the likelihood that industry incumbents will strongly contest the efforts of new entrants to gain a market footholdThe industry is not characterized by scale economies and/or sizable learning or experience curve effects, and few firms in the industry hold key patents and/or possess significant proprietary technology not readily available to a newcomer.

Question 1 (1 point)Which of the following is more likely to occur when there are high barriers to entry in an industry? aThe firm(s) in the industry earn economic profits in the long run. bThe industry will be characterized by diseconomies of scale cThe firm(s) in the industry are price takers. dThe firm(s) will charge a price on the inelastic portion of the demand curve.

Potential entrants are more likely to be deterred from actually entering an industry when Question 2AnswerA.incumbent firms are willing and able to be aggressive in defending their market positions against entry.B.incumbent firms are complacent.C.buyers are not particularly price-sensitive and the industry already contains a dozen or more rivals.D.the relative cost positions of incumbent firms are about the same, such that no one incumbent has a meaningful cost advantage.E.buyer switching costs are moderately low because of strong product differentiation among incumbent firms.

Which factor makes an environment attractive for new entrants?Multiple Choicehigh barriers to entrylow industry growthfavorable government policyhigh capital requirementssmall customer base

Which of the following is NOT an entry barrier to an industry?a.expected competitor retaliationb.economies of scalec.customer product loyaltyd.bargaining power of suppliers