Which of the following can be a barrier to entry, closing a market to new firms?
A) An elastic industry demand curve
B) Control of a vital resource by one producer
C) Diseconomies of scale
D) Ease of obtaining capital financing

Question

Quizplus · Accepted Answer

If one producer controls a vital resource, they can determine the market price and prevent new firms from entering the market. The other options do not necessarily act as a barrier to entry. An elastic industry demand curve means that there is a lot of competition, and new firms could still enter. Diseconomies of scale could make operating costs higher, but it would not necessarily prevent new firms from entering. Ease of obtaining capital financing would also not prevent new firms from entering.

Which of the Following Can Be a Barrier to Entry