ACCA Applied Knowledge · Business and Technology · Microeconomic factors
Which of the following is a typical barrier to entry that helps a firm retain a dominant market position?
Ownership of patents or exclusive control of a key resource is a barrier to entry, because it prevents rivals from entering and competing. Identical products and free information are features of competitive markets with easy entry.
- AHomogeneous products sold by many suppliers
- BFreely available market information to all buyers and sellers
- COwnership of patents or exclusive control of a key resourceCorrect
Explanation
Patents and exclusive control of key resources stop rivals entering and so protect dominant firms. Homogeneous products and perfect information are features of perfect competition, where entry is easy.
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