All of the Following Government Actions Create Barriers to Entry

question 16

Multiple Choice

All of the following government actions create barriers to entry EXCEPT

• A)limiting the number of airlines that may operate at an airport.
• B)granting a patent to a drug company.
• C)requiring a pizza parlor to get a business license.
• D)giving a power company exclusive use of the city's transmission lines.

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Definitions:

Unique Risks

Unique risks refer to the specific and individual risks that affect only a particular company, security, or investment sector, as opposed to risks that affect the entire market.

Unsystematic Risk

The risk associated with a specific company or industry, which can be reduced through diversification.

Asset-specific Risk

Refers to the risk affecting an investment's value that is associated with the particular assets the investment owns, distinct from marketwide risks.

Specific Risk

The risk associated with a particular company or sector, which can be mitigated through diversification.