A Natural Barrier to Entry Is Defined as a Barrier

question 10

Multiple Choice

A natural barrier to entry is defined as a barrier that arises because of

• A) many firms producing the good and thereby allowing choice for all consumers.
• B) technology that allows one firm to meet the entire market demand at lower average total cost than could two or more firms.
• C) one firm owning a key natural resource.
• D) patents or licences that exclude others from producing a good or service.
• E) anticompetitive practices by a firm that keep other firms from producing.

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Definitions:

Arbitrage Opportunity

A situation where a trader can profit from differences in price of the same asset in different markets without taking on any risk.

American Put Option

A type of put option that can be exercised at any time before its expiration, allowing the holder to sell the underlying asset at a specified price.

Exercise Price

The price at which the holder of an option can buy (in case of a call option) or sell (in case of a put option) the underlying asset.

Call Option

A financial contract giving the buyer the right, but not the obligation, to buy an asset at a specified price within a specific time.