Principles of Economics 2e
Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
Textbook Question
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Chapter 9, Problem 1SCQ

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.

  1. A patented invention
  2. A popular but easily copied restaurant recipe
  3. An industry where economies of scale are very small compared to the size of demand in the market
  4. A well-established reputation for slashing prices in response to new entry
  5. A well-respected brand name that has been carefully built up over many years

Expert Solution & Answer
Check Mark
To determine

(a)

The classification of the situation based on the given categories.

Answer to Problem 1SCQ

A patent invention is a government enforced barrier to entry.

Explanation of Solution

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.

Economics Concept Introduction

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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It refers to the factor or consideration exhibited by a company, service, product or brand as the reason that one product or service is different from and better than the others and that enables it to stand out from competitors.
There are several hamburger shops around you. You are trying to find ways to make your hamburger shop the most successful hamburger shop in your area. What is at least one way you would differentiate your shop from others?
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Principles of Economics 2e

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