If it is difficult or costly to withdraw from an industry,competitors may decide to stay in the industry even if they are making losses.

Question

Quizplus · Accepted Answer

This statement is true. When competitors find it difficult or costly to exit an industry, they may continue operating even if they are making losses. This can result in an oversupply of goods or services in the market, which further drives down prices and profits for all firms in the industry. This phenomenon is known as the "exit barrier effect" and it can lead to a prolonged period of losses and low profitability for firms in the industry.

If It Is Difficult or Costly to Withdraw from an Industry,competitors