What is meant by the term "government-imposed barrier to entry"? Why would a government be willing to impose barriers to entering an industry?
What will be an ideal response?
Government-imposed barriers to entry are government-issued restrictions which keep new firms from entering an industry. One reason governments are willing to erect barriers to entering an industry is that these barriers may improve the standard of living in the long run; for example, granting patents encourages the development of new products and technologies. Another reason is that firms do favors for politicians who enact such provisions (for example, contributing to campaigns).
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To help pay for the cost of sport related injuries, the government imposes a tax on sellers of all sports equipment. Referring to the above figure, the area that equals the tax revenue the government raises from this tax on sports equipment is
A) P1P3ed. B) ecd. C) P0P2ca. D) P1P2cb.
Moral hazard is associated with
A) imperfect information. B) perfect information. C) the low costs of monitoring behavior. D) all of these choices.
The United States can produce 1,000 shoes if it specializes in shoe production. Alternatively, it can produce 500 shirts. Taiwan can produce 500 shoes or 200 shirts. Explain which country will specialize in shoe production and which in shirt production. What are the possible terms of trade?
Which of the following is associated with increased use of solar panels?
a. negative production externalities b. positive production externalities c. negative consumption externalities d. positive consumption externalities