If a firm in a market with no entry or exit barriers raises its prices

Question

If a firm in a market with no entry or exit barriers raises its prices above marginal cost and begins to earn abnormal profits, potential rivals will enter the market to  make an advantage of these profits .

(A) make an advantage of these profits
(B) take advantage with these profits
(C) profit from these advantages
(D) take advantage of these profits
(E) take advantage from this profit

Masterscorp · Answer

The idiom is "to take advantage of something". Thus, D) must be correct.

pickykaty · Answer

It is idiom problem. ‘Take advantage of’

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KS15 · Answer

I dont think OA can be correct here. Answer must be C. How can you take advantage of profits?And ya, just because there is no other error does not mean that we have to force it to be an idiomatic problem. I see most questions quoted as from GMAT Paper tests are of poor quality and have been retired. Anyways, experts know best. 
 GMATNinja 
 GMATNinja 2

nikitamishra25 · Answer

GMATNinja 
 GMATNinja 2
 VeritasPrepBrian 
 AjiteshArun 
Hello Experts,

what's the problem with C?

TIA

AjiteshArun · Answer

Hi  nikitamishra25 ,

Let's try to find something that the noun  advantages  in option C can refer to. There are three things before  abnormal profits :
1. no entry barriers
2. no exit barriers
3. a firm raising its prices above marginal cost

None of these three things is a good fit for  advantages . The first two are disadvantages for the existing firm, and if we assume that they are advantages for potential rivals, those rivals would have already entered the market. That is, the intended meaning is that there is some reason ( advantages , or better,  reason / opportunity ) for potential rivals to enter a market, but the first two characteristics are not new, and therefore, we don't expect them to  trigger  market entry.

We can read the sentence like this: in a market with characteristics A and B, if a firm adopts strategy X (raising prices above marginal cost), an advantage will be created ( abnormal profits ). This means that the only reason (trigger) in the sentence for potential rivals to enter the market is  abnormal profits .

Notice how I used the word  advantage  to refer to  abnormal profits . You can take the same call: would you say "Our firm earns abnormal profits. This is an advantage." or would you say "Our firm earns abnormal profits. These are advantages."? We must go with the first one:  abnormal profits  are an  advantage  (we can't refer to  abnormal profits  as "advantage s "). Potential rivals will enter the market to take advantage of just one thing:  abnormal profits . This means that there is nothing for the plural noun  advantages  in option C to refer to.

ExpertsGlobal5 · Answer

Hello  nikitamishra25 ,

We hope this finds you well.

To answer your query, in the sentence formed by Option C, there is no noun that "advantages" can logically refer to, so Option C produces an incoherent meaning.

We hope this helps.
All the best!
Experts' Global Team

If a firm in a market with no entry or exit barriers raises its prices

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If a firm in a market with no entry or exit barriers raises its prices

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