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From course:

Economics A Level (DONEEEEEEE)

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Question:

How can Barriers to Entry happen from the Industry’s Nature?

Author: eric_galvao



Answer:

-Captain Intensive Industries need High Capital Expenditure such as Aeroplane Production. The Cost of breaking into the Market may be too Much -If Investments are unable to be Recovered when Firms leave the Market then it seems too Risky (Barriers to Exit is a Barrier to Entry) -If the Minimum Efficient Scale of Production exists then New Firms coming in, on a Smaller Scale, will be Selling at a Higher Point on the AC Curve. This leads to a Higher Price (Economies of Scale)


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