Profits will be
A)high,regardless of the degree of rivalry if there are no entry barriers.
B)high,when the degree of rivalry is high.
C)low,when the degree of rivalry is low.
D)low,when the degree of rivalry is high.

Question

Quizplus · Accepted Answer

When the degree of rivalry is high, firms are competing aggressively with each other, which puts pressure on prices, and thereby results in lower profits. Therefore, low profits are expected when the degree of rivalry is high.

Profits Will Be