Question

With _____, there are barriers to entry that keep competitors out of the market.

Answer 1

B, a monopoly because when a company monopolizes other companies, it means they're buying them out, which results in no competition

Answer 2

The correct answer is B.

A monopoly is a market structure where a single firm serves the whole demand of a specific good or service. It does not face competitors because there are no products that can act as close substitutes, therefore, such firm has absolute market power to decide the price charged for its products. So, the monopoly is able to charge a higher price than in a perfect competition scenario and will earn much larger profits.

Morover, in order to protect its privileged position, the monopolist sets trade barriers that prevent new competitors from entering the industry. For example, monopolies are usually large firms that enjoy economies of scale therefore, if they want to, they can lower the prices of their products up to a point that is impossible for newly-born enterprises. Such cheap prices would attract the whole demand and the new firm would be forced to close down and abandon the sector.