When comparing early and late entrants doing business in a country, it can be said that:

• A. Late entrants always have lower costs due to established infrastructure.
• B. Early entrants may benefit from first-mover advantages such as brand recognition and customer loyalty.
• C. Late entrants face fewer risks than early entrants when entering a new market.
• D. Early entrants are guaranteed higher profits than late entrants.

Answer: (B)

Verified step by step guidance

1. Step 1: Understand the concept of 'first-mover advantage' in microeconomics, which refers to the benefits that early entrants in a market can gain, such as brand recognition, customer loyalty, and the ability to set industry standards.
2. Step 2: Recognize that late entrants may benefit from existing infrastructure and market knowledge, potentially lowering their costs, but this does not guarantee they will always have lower costs than early entrants.
3. Step 3: Analyze the risks faced by early and late entrants. Early entrants often face higher uncertainty and investment risks because the market is new, while late entrants may face fewer risks but also more competition.
4. Step 4: Evaluate the profitability aspect. Early entrants are not guaranteed higher profits because late entrants can sometimes innovate or improve on the early entrants' offerings, capturing market share.
5. Step 5: Conclude that the correct statement is that early entrants may benefit from first-mover advantages such as brand recognition and customer loyalty, which can be significant competitive advantages in a new market.