Entry and Exit

Description: This quiz covers the concepts of entry and exit in the context of industrial organization.
Number of Questions: 15
Created by:
Tags: industrial organization entry exit barriers to entry barriers to exit
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What is the process by which new firms enter a market called?

  1. Entry

  2. Exit

  3. Market Penetration

  4. Market Expansion


Correct Option: A
Explanation:

Entry is the process by which new firms enter a market.

What is the process by which firms leave a market called?

  1. Entry

  2. Exit

  3. Market Contraction

  4. Market Withdrawal


Correct Option: B
Explanation:

Exit is the process by which firms leave a market.

What are the factors that affect the decision of a firm to enter a market?

  1. Barriers to Entry

  2. Market Size

  3. Profit Potential

  4. Competition


Correct Option:
Explanation:

The decision of a firm to enter a market is affected by a number of factors, including barriers to entry, market size, profit potential, and competition.

What are the factors that affect the decision of a firm to exit a market?

  1. Sunk Costs

  2. Profitability

  3. Competition

  4. Technological Change


Correct Option:
Explanation:

The decision of a firm to exit a market is affected by a number of factors, including sunk costs, profitability, competition, and technological change.

What are the potential benefits of entry into a market?

  1. Increased Competition

  2. Lower Prices

  3. More Innovation

  4. All of the above


Correct Option: D
Explanation:

Entry into a market can lead to increased competition, lower prices, and more innovation.

What are the potential costs of entry into a market?

  1. Barriers to Entry

  2. Sunk Costs

  3. Risk of Failure

  4. All of the above


Correct Option: D
Explanation:

Entry into a market can involve barriers to entry, sunk costs, and the risk of failure.

What are the potential benefits of exit from a market?

  1. Reduced Losses

  2. Freed-up Resources

  3. Improved Efficiency

  4. All of the above


Correct Option: D
Explanation:

Exit from a market can lead to reduced losses, freed-up resources, and improved efficiency.

What are the potential costs of exit from a market?

  1. Sunk Costs

  2. Job Losses

  3. Negative Impact on Reputation

  4. All of the above


Correct Option: D
Explanation:

Exit from a market can involve sunk costs, job losses, and a negative impact on reputation.

What are some of the barriers to entry into a market?

  1. Economies of Scale

  2. Patents

  3. Government Regulations

  4. All of the above


Correct Option: D
Explanation:

Barriers to entry into a market can include economies of scale, patents, and government regulations.

What are some of the barriers to exit from a market?

  1. Sunk Costs

  2. Long-term Contracts

  3. Employee Protection Laws

  4. All of the above


Correct Option: D
Explanation:

Barriers to exit from a market can include sunk costs, long-term contracts, and employee protection laws.

How can entry and exit affect the structure of a market?

  1. Increased Competition

  2. Lower Prices

  3. More Innovation

  4. All of the above


Correct Option: D
Explanation:

Entry and exit can affect the structure of a market by increasing competition, lowering prices, and promoting innovation.

How can entry and exit affect the performance of firms in a market?

  1. Increased Efficiency

  2. Improved Profitability

  3. Reduced Costs

  4. All of the above


Correct Option: D
Explanation:

Entry and exit can affect the performance of firms in a market by increasing efficiency, improving profitability, and reducing costs.

How can entry and exit affect the welfare of consumers?

  1. Lower Prices

  2. More Variety

  3. Improved Quality

  4. All of the above


Correct Option: D
Explanation:

Entry and exit can affect the welfare of consumers by lowering prices, increasing variety, and improving quality.

What are some of the policy implications of entry and exit?

  1. Antitrust Laws

  2. Regulation

  3. Government Subsidies

  4. All of the above


Correct Option: D
Explanation:

The policy implications of entry and exit can include antitrust laws, regulation, and government subsidies.

What are some of the challenges in studying entry and exit?

  1. Data Availability

  2. Measurement Issues

  3. Endogeneity

  4. All of the above


Correct Option: D
Explanation:

The challenges in studying entry and exit include data availability, measurement issues, and endogeneity.

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