Question

The threat of new competitors will enter your market is _________ when entry is easy and _________ when there are significant barriers to entry.

Answer 1

Answer:

higher

lower

Explanation:

The easier it is to enter a market the higher the threat of new competitors and the more difficult it is to enter a market, the lower the threat of new competitors.

For example, it is pretty easy to set up a lemonade stand as the cost of doing so is quite low. So, it is easier for anyone to decide to set up a lemonade stand. So, we can say it is easy to enter the lemonade market and the threat of new competitors is high.

On the other hand, a research lab that produces medicine is pretty difficult to enter. the cost of setting up a lab is high, in addition one has to be approved by the government. so, it is difficult to enter this market and the threat of new competitors is low.