Which of the following is considered a barrier to entry into an industry?

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BlackTom AI · Accepted Answer

Question: Which of the following is considered a barrier to entry into an industry?

Option 1: 'Standardized products' — This is generally not a barrier. Standardized products imply that products are uniform and easy to imitate or switch between providers, which lowers entry barriers rather than raises them. Firms can enter the market without needing specialized capabilities to differentiate their product.

Option 2: 'Low start-up costs' — Low start-up costs actually reduce barriers to entry. When it costs little to begin, more potential entrants can afford to try to enter the industry, increasing competition rather than hindering it.

Option 3: 'Ownership of essential property' — This creates a real barrier to entry. If a firm owns an essential resource or property critical to producing the product or delivering the service, other potential entrants cannot access the necessary input, thereby restricting competition.

Option 4: '"Price taker" status' — Being a price taker is typically associated with perfect competition or highly competitive markets where firms have little control over prices. While it relates to market structure, it is not a barrier to entry; rather, it describes the outcome once entrants have entered and compete.

In sum, the presence of ownership of an essential property or resource constitutes a barrier to entry, whereas standardized products, low start-up costs, and price-taker dynamics do not constitute such barriers under typical market definitions.

Which of the following is considered a barrier to entry into an industry?

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