The greater the exit barriers, the harder it is for companies to reduce capacity, and the greater the threat of severe price competition.

Question

Quizplus · Accepted Answer

Exit barriers refer to the costs and difficulties involved in ceasing operations or reducing capacity in a particular industry. If the exit barriers are high, companies may find it difficult to reduce capacity or exit the industry altogether, leading to overcapacity and intense price competition. Therefore, the statement is true.

The Greater the Exit Barriers, the Harder It Is for Companies