Question

Which describes a barrier to entry?

Anything that protects a firm from the arrival of new competitors

A government regulation that bars a monopoly from earning economic profit

Something that establishes a barrier to expanding output

firms in the market already incurring economic losses so that no new firm wants to enter the market

Question 22

A merger between T-Mobile and Sprint (2 wireless service providers) would be an example of a

vertical merger

horizontal merger

conglomerate merger

duopoly merger

Answer 1

21. ans A

barriers to entry: Anything that protects a firm from the arrival of new competitors. In theories of competition in economics, a barrier to entry, or an economic barrier to entry, is a fixed cost that must be incurred by a new entrant, regardless of production or sales activities, into a market that incumbents do not have or have not had to incur

22. ans B

A horizontal merger is a merger or business consolidation that occurs between firms that operate in the same industry. Competition tends to be higher among companies operating in the same space, meaning synergies and potential gains in market share are much greater for merging firms.