Question

Which of the following is NOT potentially a barrier to entry into a product market?A. patent protection on the design of the product B. the absence of economies of scale in the product marketC. government licensing of the product's producers D. the control of a crucial input necessary to produce the product E. All of the above are potentially barriers to entry into a product market.

Answer 1

Among the given options, the absence of economies of scale in the product market is not a barrier to entry; all other options are barriers, with patent protection and government licensing being government-enforced and control of a crucial input being non-government enforced.

Step-by-step explanation:

To address the student's question regarding barriers to entry into a product market, it's important to understand that such barriers prevent or discourage new competitors from easily entering the market. In the options provided, only one statement does not represent a barrier to entry: the absence of economies of scale in the product market. Let's classify each option:

• Patent protection on the design of the product is a government-enforced barrier.
• The absence of economies of scale in the product market is not a barrier to entry; in fact, it may facilitate entry.
• Government licensing of the product's producers is a government-enforced barrier.
• Control of a crucial input necessary to produce the product is a barrier to entry, but it is not government-enforced.

Hence, of the given options, B. the absence of economies of scale in the product market is NOT potentially a barrier to entry into a product market.

Answer 2

The correct answer is option B.

Step-by-step explanation:

If a producer has patent for a product it means others cannot produce it. So, this a barrier to entry.

Similarly, in case of licensing only the producer holding license can produce. So, it is barrier to entry.

The control to a crucial input will also restrict others to produce. So, this will also be considered as a barrier.

Economies of scale is cost advantage to a firm because of its large size. It is a barrier to entry as it would discourage other new firms to enter.

Absence of economies of scale is not a barrier to entry in the product market.