Question

Barriers to entry do not occur when

a. diseconomies of scale in production exist in an industry

b. a firm controls a scarce resource

c. the firm that introduces a product is granted a patent

d. economies of scale in production exist in an industry

e. the government requires a professional license or franchise agreement

Answer 1

a. diseconomies of scale in production exist in an industry

(Diseconomies of scale in the long run increases the long run average cost of production of firms. So, it does not lead to barriers to entry because new firms can enter without facing any competition from existing firms in the market whereas when there are exonomies of scale existing firms have lower average costs due to size so new firms can not compete with the existing firms because of larger costs which deters entry. Entry is deterred in all other cases also except under diseconomies of scale.)