Which of the following industries has the lowest barrier to entry?

• A. Pharmaceutical production
• B. Electric utility providers
• C. Commercial airline manufacturing
• D. Retail coffee shops

Answer: (D)

Verified step by step guidance

1. Step 1: Understand the concept of 'barriers to entry' in microeconomics. Barriers to entry are obstacles that make it difficult for new firms to enter a market. These can include high startup costs, strict regulations, economies of scale, or strong brand loyalty.
2. Step 2: Analyze each industry listed in terms of typical barriers to entry. For example, pharmaceutical production often requires large investments in research and development, regulatory approval, and patents, which are high barriers.
3. Step 3: Consider electric utility providers, which usually require significant infrastructure investment, government regulation, and often operate as natural monopolies, indicating very high barriers to entry.
4. Step 4: Look at commercial airline manufacturing, which involves massive capital investment, advanced technology, and regulatory compliance, again representing high barriers.
5. Step 5: Compare these with retail coffee shops, which generally require relatively low startup costs, minimal regulatory hurdles, and easy access to suppliers and customers, indicating the lowest barriers to entry among the options.