Which of the following is most vital if the firms in an industry are going to earn economic profit in the long run?

Question

Quizplus · Accepted Answer

High barriers to entry into the industry are crucial if firms are going to earn economic profit in the long run. If there are low barriers to entry, new firms will enter the market causing competition, reducing the price and ultimately reducing the profit margin. High barriers to entry, such as patents or high startup costs, limit the number of firms that can compete in the market, allowing existing firms to maintain higher prices and profit margins.

Which of the Following Is Most Vital If the Firms