Explain the concept of "barriers to entry," and provide examples of the three most common barriers to entry
Barriers to entry prevent or discourage business competitors from entering the market. These barriers include control of a physical resource, legal restrictions on competition, and economies of scale.
Control of a Physical Resource: If a company can control a scarce physical resource, other firms may find it difficult to compete. For example, the Organization for Petroleum Exporting Countries (OPEC) exerts control over a significant share of the world's petroleum, a crucial input in gasoline production.
Legal Restrictions: These include patents, which give the inventor the exclusive legal right to make, use, or sell the invention for a limited time; trademarks, which prevent others from selling similar products using the same trademark; and copyrights, which offer legal protection of original works of authorship for the life of the author plus 70 years.
Economies of Scale:
Economies of scale can combine with the size of the market to limit competition. When a firm experiences economies of scale, as exhibited by a declining average total cost curve, it is called a natural monopoly. Due to economies of scale, one producer can serve the entire market more efficiently than multiple smaller producers that would need to make duplicative physical capital investments.
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Discuss the importance of rural-urban migration as a source of urban population growth in various parts of the developing world, being as specific as you can
What will be an ideal response?
If consumers switch away from eating margarine at the same time that the number of margarine suppliers increases, then
a. these two effects cancel each other out and there is no change in the margarine market equilibrium b. the demand curve shifts left and the supply curve shifts right c. there is a margarine price increase d. there is an excess demand for margarine e. the equilibrium quantity of margarine must increase
Are money and income the same thing?
a. No, money is measured at a point in time and income is measured for a period of time. b. No, money is measured for a period of time and income is measured at a point in time. c. Yes, they are just measured in different ways. d. Yes, the only difference is real versus nominal.
In the three-step method, what is accomplished in step 1?
a. finding the total revenue b. finding the total cost c. finding the market price d. finding the profit-maximizing output level