Final answer:
The answer is A. True, as unique product attributes that lead to product differentiation act as a barrier to entry in a market, making it harder for new entrants to compete.
Step-by-step explanation:
Unique product attributes do indeed represent a barrier to industry entry, known as differentiation. Differentiation allows a company to create a competitive advantage through unique product attributes and, as a result, reduce the threat of new entrants. To further explain the concept, here are examples of different types of barriers to entry:
- A government-enforced barrier to entry might include a city regulating the number of licenses for taxicabs.
- An example of a barrier to entry that is not government-enforced could be an established brand name built up over many years.
- A monopoly results when barriers to entry are high enough, which curtails competition and allows the monopolistic entity to earn significant economic profits.
Each of these factors impacts the ability of new competitors to enter a market and can either be a direct result of regulatory rules or emerge from strategic company actions. Such barriers can significantly influence market dynamics and industry structure.