Sia
Question
Microeconomics
Posted 6 months ago
All of the following are barriers to entry EXCEPT:
Choose 1 answer:
(A) high minimum efficient scale
(B) high fixed costs
(C) exclusive ownership of a key resource
(D) low costs
(E) patents
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Answer from Sia
Posted 6 months ago
Sure, let's address the question about barriers to entry.
Solution
a
Definition of Barriers to Entry: Barriers to entry are obstacles that make it difficult for new firms to enter a market. These can include high startup costs, exclusive access to resources, patents, and economies of scale
b
Analysis of Options:
- (A) High minimum efficient scale: This is a barrier because it requires firms to produce at a large scale to be cost-effective.
- (B) High fixed costs: This is a barrier because it requires significant initial investment.
- (C) Exclusive ownership of a key resource: This is a barrier because it restricts access to essential inputs.
- (D) Low costs: This is not a barrier; in fact, it facilitates entry.
- (E) Patents: This is a barrier because it grants exclusive rights to produce a product
Answer
(D) low costs
Key Concept
Barriers to Entry
Explanation
Barriers to entry are factors that prevent or hinder new firms from entering a market. Low costs are not considered a barrier because they make it easier for new firms to enter the market.
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