Which Barrier to Entry Results in the Creation of a Natural

question 146

Multiple Choice

Which barrier to entry results in the creation of a natural monopoly?

• A) Legal barriers like government franchises.
• B) Economies of scale.
• C) Ownership of a vital resource.
• D) Patents and copyrights.

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Definitions:

Required Rate

This is often referred to as the minimum acceptable return on an investment, set by investors or managers.

Payback

The amount of time it takes for an investment to generate an amount of income or cash flow to recover its initial cost.

Annual Cash Flows

The total amount of money being transferred in and out of a business, measured yearly.

Required Rate

The minimum return that investors demand for investing in a particular asset, reflecting the risk of the investment.