Which of the following is NOT a barrier to entry in competitive markets?

• A. High startup costs
• B. Perfect information about prices and products
• C. Government licensing requirements
• D. Control over essential resources

Answer: (B)

Verified step by step guidance

1. Step 1: Understand what a 'barrier to entry' means in the context of competitive markets. A barrier to entry is any obstacle that makes it difficult for new firms to enter a market and compete with existing firms.
2. Step 2: Review each option and determine if it restricts or prevents new firms from entering the market. For example, 'High startup costs' require significant investment, which can deter new entrants.
3. Step 3: Analyze 'Government licensing requirements' as a barrier. Licensing can legally restrict entry by requiring firms to meet certain criteria before operating.
4. Step 4: Consider 'Control over essential resources' as a barrier. If existing firms control key inputs, new firms cannot easily access these resources, limiting entry.
5. Step 5: Evaluate 'Perfect information about prices and products.' Unlike the other options, perfect information reduces uncertainty and helps new firms make informed decisions, thus it is not a barrier to entry.