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

Control of a vital resource by one producer can create a barrier to entry as new firms may not have access to the resource needed to produce the good or service, leaving the market closed to new competition. Option A, an elastic industry demand curve, would make it easier for new firms to enter the market as there is more opportunity to find a niche. Option C, diseconomies of scale, would only affect firms already in the market, not potential entrants. Option D, ease of obtaining capital financing, may make it easier for new firms to enter the market, but does not necessarily create a barrier to entry.

Which of the Following Can Be a Barrier to Entry