Competition is more likely to exist when
A) there is easy entry into and exit out of industries.
B) a government-issued license is required to set up a ﬁrm in an industry.
C) the government purchases most goods and services.
D) economic power is concentrated among a few large ﬁrms.

Question

Quizplus · Accepted Answer

Easy entry into and exit out industries means that new firms can easily come into the market and compete with existing firms. This increases competition as more firms compete to gain market share. In contrast, government-issued licenses or economic power concentrated among a few large firms typically limit the number of firms in the market, reducing competition. The government purchasing most goods and services has no direct impact on competition in private industries.

Competition Is More Likely to Exist When