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Please classify the source of barriers to entry described in each scenario below. ownership of a key input economies of scale government-imposed
a. There are a limited number of licenses for taxi drivers in NYC. ownership of a key input economies of scale government-imposed
b. Drug companies obtain patents so that they can recover research and development costs by the exclusive sale of the drug for some number of years. ownership of a key input economies of scale government-imposed
c. Carribean Cruz owns the only swimmable beach on an exclusive island in the Bahamas
d. The government establishes a quota on how much foreign oil can be imported
e. It is very expensive to build an amusement park, but not that expensive to admit an additional customerf. Building a brewery is a high start up cost operationg. The governemnt established a tariff on tear

Sagot :

The source of barriers to the scenarios described will be:

Government imposed:

  • There are a limited number of licenses for taxi drivers in NYC.
  • Drug companies obtain patents so that they can recover research and development costs by the exclusive sale of the drug for some number of years.
  • The government established a tariff on tea.

Ownership of a key input:

  • Carribbean Cruz owns the only swimmable beach on an exclusive island in the Bahamas.
  • The government establishes a quota on how much foreign oil can be imported.

Economies of scale:

  • It is very expensive to build an amusement park, but not that expensive to admit an additional customer.
  • Building a brewery is a high start-up cost operation.

It should be noted that government-imposed barriers are the barriers that can be in form of patents, licensing, tariffs, etc.

The ownership of key input is when the production of a good requires particular input,  therefore, controlling the input can be a barrier to entry.

Economies of scale is when the long run average variable cost of a firm falls as there is an increase in output.

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