Question

Which of the following markets has a barrier to entry? A. Stan's Garbage Company runs the only trash colection service in town. O B. Crystal develops a new product and patents it. O C. There are already many fast food restaurants in the City of Buffalo. O D. Gold can only be mined in certain places in the world.

Answer 1

The barriers to entry arises from three main sources and they are

• Key resource is owned by the firm.
• When the government gives the exclusive right to produce a particular commodity or a service.
• And the third one is , the economies of scale enjoyed by the firm allows the firm to produce the goods more efficient than the others and it act as a barrier to the entry.

Here the barrier to entry is the patent given by the government to the firm, the patent gives the exclusive right to produce the goods and services in the economy to the firm.

Ans: b). Crystal develops a new product and patents it.