Question

Explain two barriers to entry for a new business

Answer 1

Answer: Government regulation, Economies of scale

Explanation:

Barriers to entry refers to the restrictions that are imposed on the entry of a new firm or business into the market. These can be,

a). Government regulation- Sometimes the government puts many restrictions on the entry of a new firm. These can be license requirement or by limiting the availability of a resource.

b). Economies of scale- These refer to the efficiency in production that occurs when one firm grows larger in size and is able to cover the entire market at a lower cost than many small firms producing the same good in smaller quantities. The cost of production is lower for a single firm than for many firms.

Answer 2

For the answer tot he questions above, one of the barriers to entry is CAPITAL REQUIREMENTS. the financial resources required for infrastructure, machinery, R&D and advertising. Startups may get around capital requirements by outsourcing parts of the operation to companies that can leverage existing investments.
The other one is ACCESS TO DISTRIBUTION CHANNELS. This can be a barrier if logical distribution channels have been locked up by incumbents.