Question

Which of the following is not considered a barrier to entry? Economies of scale Patents Control...

  1. Which of the following is not considered a barrier to entry?
    1. Economies of scale
    2. Patents
    3. Control of a scarce resource
    4. Licensing
    5. Perfect price discrimination???
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Homework Answers

Answer #1

Ans: e) Perfect price discrimination.

Explanation:

Following factors are considered as barriers to entry in a monopoly market ;

  1. Economies of scale
  2. Patents
  3. Control of a scarce resource
  4. Licensing

Economies of scale in production leads low cost of production for the firm under monopoly. So it creates a barrier for the new firm to enter in to the market for the production of same goods or services.

Patents and licensing are the legal rights provided by the government.

Control of scarce resources helps the exisitng firm to get the raw materials in a low costs. So it creates a barrier for the new firm to enter in to the market.

On the other hand , perfect price discrimination refers to the selling of same product at different prices to the different customers. It is a feature of firm under monopoly market.

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