Multiple Choice
In competitive markets, the pressure of rivalry increases when which of the following forces increases in intensity?
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3. The Market Forces of Supply and Demand
Competitive Markets
Multiple Choice
Which of the following is NOT a barrier to entry in competitive markets?
A
High startup costs
B
Perfect information about prices and products
C
Government licensing requirements
D
Control over essential resources
Verified step by step guidance1
Step 1: Understand what a 'barrier to entry' means in the context of competitive markets. A barrier to entry is any obstacle that makes it difficult for new firms to enter a market and compete with existing firms.
Step 2: Review each option and determine if it restricts or prevents new firms from entering the market. For example, 'High startup costs' require significant investment, which can deter new entrants.
Step 3: Analyze 'Government licensing requirements' as a barrier. Licensing can legally restrict entry by requiring firms to meet certain criteria before operating.
Step 4: Consider 'Control over essential resources' as a barrier. If existing firms control key inputs, new firms cannot easily access these resources, limiting entry.
Step 5: Evaluate 'Perfect information about prices and products.' Unlike the other options, perfect information reduces uncertainty and helps new firms make informed decisions, thus it is not a barrier to entry.
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