Entry leads to reduced firm profits because it leads to a lower price.

Name: Entry leads to reduced firm profits because it leads to a lower price.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

When a new firm enters the market, competition increases, which often results in reduced prices for goods or services. Lower prices mean lower profits for existing firms in the market as they have to compete with the new entrant. Therefore, entry leads to reduced firm profits, making option A the correct answer.

Entry Leads to Reduced Firm Profits Because It Leads to a Lower