Asked by Brandon Morrone on Apr 24, 2024
Verified
An obstacle that prohibits new firms from entering an industry defines
A) economies of scale.
B) barriers to entry.
C) monopoly power.
D) natural monopoly.
Barriers To Entry
Economic or legislative obstacles that prevent new competitors from easily entering an industry or area of business.
Monopoly Power
The degree of power held by a singular entity to control prices or exclude competition within a market.
Natural Monopoly
A market condition where a single firm can supply a good or service to an entire market more efficiently than multiple firms due to high fixed or startup costs.
- Understand the concept of barriers to entry and their effect on market competition.
Verified Answer
AR
Abdellah RahmouneMay 02, 2024
Final Answer :
B
Explanation :
Barriers to entry refer to factors that make it difficult for new firms to enter an industry and compete with existing firms. These barriers can take many forms, such as high start-up costs, patents, economies of scale, access to distribution channels, and government regulations. These barriers restrict the entry of new firms in the market and protect the market power of existing firms. Therefore, option B is the most appropriate choice.
Learning Objectives
- Understand the concept of barriers to entry and their effect on market competition.