Sammy's Inc.competes with a few other firms because there are natural barriers to entry.Sammy's operates in
A) a perfectly competitive market.
B) an oligopoly.
C) a monopolistically competitive market.
D) a monopoly.
E) a natural monopolistically competitive market.

Question

Quizplus · Accepted Answer

The fact that there are natural barriers to entry indicates that there are only a few firms competing in the market, which is characteristic of an oligopoly. In a perfectly competitive market, there are no barriers to entry and a large number of firms compete. Monopolistically competitive markets have many firms selling differentiated products, but there are no significant barriers to entry. Monopoly and natural monopolistically competitive markets have only one dominant firm, and the former has significant barriers to entry while the latter has natural barriers due to economies of scale.