Which of the following would NOT be a reason for BIC to decide to compete in Mont Blanc's market?

• A. BIC has the resources to differentiate its products from Mont Blanc.
• B. There is potential for BIC to gain market share from Mont Blanc.
• C. Mont Blanc's market is experiencing rapid growth and increasing demand.
• D. Mont Blanc's market has high entry barriers and low profit margins.

Answer: (D)

Verified step by step guidance

1. Step 1: Understand the concept of market entry decisions in microeconomics, which involves analyzing factors like resources, market growth, competition, entry barriers, and profit margins.
2. Step 2: Identify reasons that encourage a firm to enter a market, such as having sufficient resources to differentiate products, potential to gain market share, and the market experiencing rapid growth and increasing demand.
3. Step 3: Recognize that high entry barriers (such as high startup costs, strict regulations, or strong incumbent advantages) and low profit margins typically discourage firms from entering a market because they reduce the likelihood of earning sufficient returns.
4. Step 4: Compare each option to these principles: if a market has high entry barriers and low profit margins, it is generally not attractive for new competitors like BIC to enter.
5. Step 5: Conclude that the option stating 'Mont Blanc's market has high entry barriers and low profit margins' would NOT be a reason for BIC to compete in that market, as it represents a deterrent rather than an incentive.