The ability to exit a business relatively easily
A)tends to limit the intensity of competition in the industry.
B)increases the threat posed by a new entry.
C)makes it difficult for an entrepreneur to recoup the initial investment.
D)encourages entrepreneurs to use predatory pricing in order to survive.

Question

Quizplus · Accepted Answer

The ability to exit a business relatively easily reduces the barriers to exit, which tends to limit the intensity of competition in the industry. This is because businesses that are struggling or not making a profit can easily exit the market, removing excess capacity and reducing competition.

The Ability to Exit a Business Relatively Easily