Final answer:
Barriers to entry can be classified as government-enforced barriers, such as a limited number of taxicab licenses or mandatory safety tests and insurance, and non-government-enforced barriers like well-known trademarks and ownership of unique resources. Additionally, industries with large economies of scale present natural barriers to entry.
Step-by-step explanation:
When evaluating different scenarios within the context of barriers to entry in the marketplace, it is important to distinguish between those that are government-enforced and those that arise naturally or through market conditions.
- a. A city passes a law on how many licenses it will issue for taxicabs - This is an example of a government-enforced barrier to entry. The limitation of available licenses directly restricts the number of players that can enter the market.
- b. A city passes a law that all taxicab drivers must pass a driving safety test and have insurance - This requirement is also a government-enforced barrier to entry, as it imposes regulations on who can operate in the market based on specific criteria.
- c. A well-known trademark - This represents a barrier to entry that is not government-enforced. Trademarks are legally recognized signs or designs that distinguish the goods or services of one enterprise from those of others, and they can act as a barrier because they build brand recognition and loyalty.
- d. Owning a spring that offers very pure water - This is an instance where there is no direct government-enforced barrier to entry, but it is a natural barrier to entry because ownership of a unique resource provides a competitive advantage.
- e. An industry where economies of scale are very large compared to the size of demand in the market - This describes a situation with no direct government-enforced barrier to entry. However, the need for large capital investment and operational size to achieve low unit costs can act as a barrier to new entrants.