The more difficult it is for other firms to enter a market the more likely it is that existing firms can make relatively high profits.

Question

Quizplus · Accepted Answer

This statement is true according to the theory of barriers to entry. If there are high barriers to entry (such as high start-up costs, patents or regulations), it will be harder for new firms to enter the market and compete with existing firms, allowing those firms to have more control over pricing and potentially make higher profits.

The More Difficult It Is for Other Firms to Enter