Which of the following is a potential barrier to entry that could lead to a monopoly market?

• A. Perfect information available to all firms
• B. Free entry and exit in the market
• C. Exclusive ownership of a key resource
• D. Homogeneous products sold by all firms

Answer: (C)

Verified step by step guidance

1. Understand the concept of barriers to entry: These are obstacles that prevent new firms from entering a market easily, which can lead to a monopoly if only one firm controls the market.
2. Analyze each option to see if it restricts new firms from entering the market:
3. 1. Perfect information available to all firms usually promotes competition, as all firms can make informed decisions, so it is not a barrier.
4. 2. Free entry and exit in the market means firms can enter or leave without restrictions, which encourages competition, so it is not a barrier.
5. 3. Exclusive ownership of a key resource means one firm controls an essential input or asset needed to produce the good, preventing others from entering, which is a classic barrier to entry leading to monopoly.