Which of the Following Is an Example of a Barrier

question 457

Multiple Choice

Which of the following is an example of a barrier to entry?

• A) Tom charges a higher price than his competitors for his house-painting services.
• B) Dick obtains a copyright for the new computer game that he invented.
• C) Harry offers free concerts on Sunday afternoons as a form of advertising.
• D) Larry charges a lower price than his competitors for his lawn-mowing services.

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Definitions:

Adverse Selection

A situation where asymmetric information results in high-risk individuals being more likely to engage in agreements, potentially leading to market failure.

Cafeteria Plan

A type of employee benefit plan that allows workers to choose from a variety of pre-tax benefit options to suit their personal needs.

Fringe Benefit

Additional compensation provided to employees beyond their normal salaries or wages, such as health insurance, pensions, or paid vacations.

Moral Hazard

The situation where one party to an agreement can take risks because the negative consequences of the risk will be borne by another party.