Which of the following factors is most likely to restrict the entry of potential competitors into...

Which of the following factors is most likely to restrict the entry of potential competitors into a market?

Select one or more:

a. economies of scale.

b.

elastic market demand curve for the product.

c. a lack of patent protection for the new entrant.

d. all of the above.

Expert Solution

Economics of scale- which are mainly acquired by large firms due to their size and which helps them to maintain a fixed cost. As the time goes they achieved the potential to decrease the firm’s output cost and can decrease the fixed price according to the market demand- certainly creates a barrier of other firms to entry.

Elastic market demand curve for the product- when the prices of goods and services depends on the consumer’s demand. Actually it depend on the Firm’s production capacity, Long-lastingness of the product, elasticity of the product etc. Which depends upon the firms internal capacity, can’t be considered a barrier of the firm to entry into market.

Patent Protection- The owner when gets the exclusive right to sell any product. Patent protection that the product can’t be commercially made- definitely it plays a big role for a competitor to enter into the market. Lack of which a competitor can enter but can’t maximize profit.

So here Economics of scale plays the key role of barrier.

Rahul Sunny answered 2 years ago

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