ECONOMICS
MARKET FAILURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A situation where the government has to become involved and limit how much a business can sell interms of product and service.
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An obstacle preventing a person or business from entering into a new market.
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A limit to the amount of product or services a business can provide upon entry into a new market.
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An obstacle that allows a person or business the ability to enter into a new market.
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Detailed explanation-1: -One of the most common barriers to entry for new players is the cost of entering a market. The equipment they use to make their products, the buildings they make them in and work from, and the raw materials all incur costs.
Detailed explanation-2: -Barriers to entry can include government regulations, the need for licenses, and having to compete with a large corporation as a small business startup.
Detailed explanation-3: -Barriers to entry are the obstacles or hindrances that make it difficult for new companies to enter a given market. These may include technology challenges, government regulations, patents, start-up costs, or education and licensing requirements.
Detailed explanation-4: -Natural barriers to entry include monopolization and high startup costs, while artificial ones include predatory pricing and patents. Examples of sectors with industry-specific barriers to entry include finance, pharmaceuticals and oil and gas.
Detailed explanation-5: -Economies of scale. Product differentiation. Capital requirements. Switching costs. Access to distribution channels. Cost disadvantages independent of scale. Government policy. Read next: Industry competition and threat of substitutes: Porter’s five forces.