Question

1. Which of the following is not considered a barrier to entry:

1. Antitrust laws

2. Better technology

3. Increasing returns to scale

4. The presence of a patent or copyright

2. A positive externality produces:

   1. Additional benefits

   2. Additional costs

   3. Additional quotas

   4. Additional marginal revenue

Answer 1

The existing firm in the market with better technology, experiencing returns to scale, or with patent or copyright pose a threat to the new firms willing to enter the market with respect to their expected scope for profitability for a long period of time. Thus, such situations pose a barrier to the entry of new firms. The exiting firm, on account of such a favorable situation, may practice predatory pricing, thereby driving the market away from any infant firm in the industry.

Anti-trust law is meant to check monopolistic practices and hence, is not considered a barrier to entry of new firms in the market.

Thus, correct answer is Anti-trust laws.

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It shall be noted that a positive externality produces additional benefits.

The additional cost is produced by negative externality.

Additional quotas are produced by government protectionist policy

Additional marginal revenue is produced even when there is no externality

Hence, the correct answer is additional benefits