Question

Suppose that the government passes legisaltion that imposes a legal barrier to entry on the tree nursery industry and the number of firms decreases. You would expect_____ in production differentiation and _____competition on product quality

Answer 1

Answer:

decline in production differentiation and ,less competition

Explanation:

One would expect a gradual decline in product differentiation. This is because the few firms left in operation do not have to seek innovative ideas to capture the market, since they are few and the chances that a new rival will emerge are minute owing to the legal barrier. There is the development of an oligopolistic competition on product quality since the number of producers left is low and there Is the barrier of new entrants, both of which are key characteristics of an oligopolistic competition.