Final answer:
The types of barriers to entry include contrived scarcity, economies of scale, and control of an essential resource. All of these factors can prevent or discourage new competitors from entering a market, with examples such as patented inventions and well-known trademarks serving as barriers.
Step-by-step explanation:
The correct answer to the question Which of the following is a type of barrier to entry? is D. all of the above. Barriers to entry are various factors that make it difficult for new firms to enter a market. These barriers include contrived scarcity, economies of scale, and control of an essential resource. A contrived scarcity might be created by agreements or monopolistic practices. Economies of scale occur when the cost per unit decreases as production scales up, giving a cost advantage to larger producers. Control of an essential resource means that a firm has exclusive access or control over a resource necessary for production, thereby preventing others from entering the market.
Here are some examples that help to classify barriers to entry:
- A government-enforced barrier to entry: A patented invention allows the holder exclusive rights to produce or sell the invention.
- A non-government-enforced barrier to entry: A well-respected brand name built up over many years creates customer loyalty that new entrants cannot easily overcome.
- No barrier to entry: An industry where economies of scale are very small compared to the size of the demand in the market does not present a significant barrier to new firms.
Understanding these barriers is important as they influence the competitive landscape and affect consumer choice and market dynamics.