Which statement best describes a barrier to entry for new firms?

• A. High Entry Barriers due to Economies of Scale
• B. Low Entry Barriers due to Globalisation
• C. No Barriers to Entry
• D. Open Access to All Markets

Answer: (A)

Barriers to entry are factors that make entering a market costly or difficult for new firms. Economies of scale mean that as production expands, average costs fall, so large, established firms can produce at a lower cost per unit than a new entrant starting from a small output. That cost advantage makes it hard for a new competitor to win enough market share or profits to justify the initial investment, creating a real barrier to entry.

So the statement describing high entry barriers due to economies of scale best captures why new firms struggle to enter in many markets. The other options imply entry would be easy—low barriers, no barriers, or open access—which would not describe a barrier to entry.