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The prospect for the long-term profitability of an existing firm is greater when
Suggested Answer: A
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The prospects of long-term profitability are contingent upon the industry's exit and entry barriers. The entry of new firms in market decreases the prospect for long-term profitability. When a firm operates in an industry that has a steep learning curve, it ios more difficult for new firms to enter the market. Thus, the prospects of long-term profitability are greater for an existing firm.
12 comments · newest first
YA
Yan
3 months ago
C is risky. New entrants can hurt existing firms. A seems safer.
FL
Flo
3 months ago
I disagree, B makes sense too. Low switching costs mean more competition.
AL
Alonzo
3 months ago
I think A is the best choice. Learning curves can lead to efficiency.
KR
Kristel
3 months ago
Distribution channels accepting new products? That’s a mixed bag!
YE
Yesenia
3 months ago
Surprised that new entrants are encouraged by policy, sounds risky!
ED
Edelmira
4 months ago
Really? I’m not sure low switching costs are a good sign.
SO
Son
5 months ago
Totally agree, option A makes the most sense!
OL
Olga
5 months ago
A steep learning curve can lead to better efficiency.
BI
Billy
6 months ago
Option D sounds plausible, but I wonder if it really guarantees long-term profitability. New products can also fail in the market.
MI
Miles
6 months ago
I remember a similar question where we discussed how government policies can impact market entry. Option C seems risky for existing firms.
VA
Valentine
6 months ago
I'm not sure about B. Low switching costs might actually make it easier for customers to leave, which could hurt profitability.
DE
Devora
6 months ago
I think option A makes sense because a steep learning curve can lead to lower production costs over time, right?