Economics 14th Edition by James Gwartney,Richard Stroup, Russell Sobel ,David Macpherson

Exercise 5

How will high entry barriers into a market influence (a) the long-run profitability of the firms, (b) the cost efficiency of the firms in the industry, (c) the likelihood that some inefficient (high-cost) firms will survive, and (d) the incentive of entrepreneurs to develop substitutes for the product supplied by the firms? Are competitive pressures present in markets with high barriers to entry? Discuss.