Online dating is considered a fragmented and highly competitive market space because of which of the following factors?

• A. Government regulation that restricts new entrants
• B. Low barriers to entry and a large number of firms offering similar services
• C. High switching costs for consumers
• D. Significant economies of scale favoring a few dominant firms

Answer: (B)

Verified step by step guidance

1. Understand the concept of market fragmentation: A fragmented market is one where there are many firms, none of which has a large market share, and where competition is intense.
2. Identify the factors that contribute to fragmentation: Typically, low barriers to entry allow many firms to enter the market easily, increasing competition and preventing any single firm from dominating.
3. Analyze the options given: Government regulation restricting new entrants would reduce fragmentation by limiting competition, so it does not explain a fragmented market.
4. Consider switching costs: High switching costs tend to reduce competition because consumers are less likely to change providers, which does not align with a highly competitive fragmented market.
5. Recognize economies of scale: Significant economies of scale favor a few dominant firms, which would lead to market concentration rather than fragmentation.