Practice question · Sort into groups
Sort each barrier to entry by its source.
Groups: Legal barrier · Economic barrier · Strategic barrier
- A rail network too costly to duplicate
- A taxi license quota set by the city
- Incumbent slashes prices whenever an entrant appears
- A 20-year pharmaceutical patent
Hints
- Ask where the wall comes from: the law, the cost curve, or the incumbent.
- Some barriers are granted; others are built deliberately.
Show the answer
Legal barrier: A 20-year pharmaceutical patent, A taxi license quota set by the city
Economic barrier: A rail network too costly to duplicate
Strategic barrier: Incumbent slashes prices whenever an entrant appears
Why
Law grants some walls, cost structure builds others, and incumbents actively dig the rest.
Practise Market Structures
The app has 7 more questions on this lesson, and keeps your place in the course. Business I is free to start.
More questions on Market Structures
- Match each structure to how a firm wins in it.
- A farmer selling wheat and a pharmaceutical firm holding a patent face the same demand curve for their own…
- A price taker in perfect competition faces a horizontal demand curve; a monopolist faces the market’s…
- Which features define perfect competition?
- In monopolistic competition, firms earn large economic profits in the long run.
- Monopolistic competition has many firms like perfect competition, yet each sets its own price. What makes the…