Question

Explain how barriers to entry influence the pricing and output decision of firms.

Answer 1

Barriers to entry affect the pricing and output decisions of a firm  in terms of the price in relation to the marginal cost. 

Because of High barriers to entry the number of firms are limited and so the number of substitutes in the market.

For example:
 
High barriers to entry in monopoly limit the number of firms to one.

As there will be only one firm, there will be no substitute.

Because there will be only one firm, demand for the good increases which in turn allows the firm to charge a price significantly higher than its marginal cost..

Answer 2

ANSWER:-------------

{output decisions of a firm in terms of the price relative}

{ barriers to entry limit the number of firms and hence the number of substitutes in the market}

hope it helps:---------

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