A natural barrier to entry is defined as a barrier that arises because of
A) many firms producing the good and thereby allowing choice for all consumers.
B) technology that allows one firm to meet the entire market demand at lower average total cost than could two or more firms.
C) one firm owning a key natural resource.
D) patents or licences that exclude others from producing a good or service.
E) anticompetitive practices by a firm that keep other firms from producing.

Question

Quizplus · Accepted Answer

A natural barrier to entry arises due to the technology that allows one firm to meet the entire market demand at lower average total cost than could two or more firms. This is known as natural monopoly. The cost of production is so high that it becomes unprofitable for new firms to enter the market, which results in fewer firms and less competition.

A Natural Barrier to Entry Is Defined as a Barrier