Which one of the following is an example of a natural barrier to entry of new firms into an industry?
A)licensing of professions
B)economies of scale
C)issuing a patent
D)a public franchise
E)all of the above

Question

Quizplus · Accepted Answer

Economies of scale are a natural barrier to entry because they occur when the average cost of production decreases as a firm produces more goods. This means that established firms with larger production capabilities have a cost advantage over new firms entering the industry, making it difficult for new firms to compete. The other options listed are examples of legal barriers to entry or government-granted protections, not natural barriers.

Which One of the Following Is an Example of a Natural