Which of the following is an implication of high exit barriers in an industry?
A) The number of underperforming firms in the industry will be low.
B) The industry will face excess capacity.
C) The competitive pressure among existing firms will be low.
D) The industry will be more attractive for new entrants.

Question

Quizplus · Accepted Answer

An industry with low exit barriers is attractive because it allows underperforming firms to exit more easily. This in turn reduces competitive pressure on the remaining firms because excess capacity is removed. In contrast, an industry with high exit barriers reduces its profit potential because excess capacity still remains.

Which of the Following Is an Implication of High Exit