Question

Which of the following is not an example of a barrier to entry?

	a.	Jackie owns the copyright to a popular song. She receives royalties every time a radio station plays her song.
	b.	John owns the only parcel of lakeside property with a beach that is safe for swimming. He charges admission to neighbors who want to use the beach.
	c.	John Jr. owns the best seafood restaurant in a popular resort area. He charges high prices because the quality of the food is so good.
	d.	Caroline owns the patent for a new running shoe. She receives payments from the company who manufactures the shoes.

Answer 1

Option C.

• John owning the best seafood restaurant and charging high prices is not a barrier to entry.
• A barrier to entry is a hinderance or a barrier that prevents other firms from entering into the market or gives sole rights to the firms already present in the market to produce and sell good.
• The various barriers to entry are :- patents, copyrights, sole proprietorship, charging lower prices for the same good that competitors have.
• If any firm charges Higher price for their good, other firms can enter the market and sell the same goods for lower rates.