Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364



Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364
Textbook Problem

Classify the following as a government-enforced barrier to entry, a banker to entry that is not government-enforced, or a situation that does not involve a barrier to entry.

a. A patented invention

b. A popular but easily copied restaurant recipe

c. An industry where economies of scale are very small compared to the size of demand in the market

d. A well-established reputation for slashing prices in response to new entry

e. A well-respected brand name that has been carefully built up over many years


To determine

The classification of the situation based on the given categories.


A patent invention is a government enforced barrier to entry.


A patent is a legal assurance by the government which allows the patent holder an exclusive right to use the invention. It acts as barrier to entry as no one else other than the patent owner can reap the benefits of the invention unless the owner decides to sell it or lease it to another party.


Concept introduction:

Barrier to entry The conditions or circumstances that prevent other firms from entering a particular industry are termed as barriers to entry. Such barriers can be either natural or government-enforced barriers.

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