If barriers to entry go up, threat of entry goes down.

Question

BlackTom AI · Accepted Answer

The statement to evaluate is: 'If barriers to entry go up, threat of entry goes down.'
Option 1: True. This aligns with standard economic theory on competitive dynamics: higher barriers to entry raise the cost or difficulty for new firms to enter a market, which reduces the likelihood that new competitors will enter, thereby lowering the threat of entry.
Option 2: False. This would imply that increasing barriers to entry somehow increases the chance or likelihood that new firms can enter, which contradicts the basic role of barriers as impediments to entry; such a claim ignores how barriers function to restrict new entrants and does not reflect typical market competition logic.
In short, raising barriers to entry makes it harder for potential entrants to overcome obstacles such as capital requirements, regulation, or technology access, leading to a decreased threat of new competition.
Therefore, the statement is consistent with the concept that higher barriers reduce entry threat, while the alternative would contradict that principle.

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If barriers to entry go up, threat of entry goes down.

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