Firm entry rates tend to be highest during the growth stage of an industry life cycle because:

Question

Quizplus · Accepted Answer

Firm entry rates tend to be highest during the growth stage of an industry life cycle because there is a shortage of production capacity that keeps margins attractive, which attracts entrepreneurs and investors to invest in the industry, and also because of the growing legitimacy of the industry that attracts more resources to the industry. Thus, option (D) is the correct choice as it highlights both of these reasons.

Firm Entry Rates Tend to Be Highest During the Growth