2. a. This is a government-enforced barrier to entry.

b. This is an example of a government law, but perhaps it is not much of a barrier to entry if most people

can pass the safety test and get insurance.

c. Trademarks are enforced by government, and therefore are a barrier to entry.

d. This is probably not a barrier to entry, since there are a number of different ways of getting pure water.

e. This is a barrier to entry, but it is not government-enforced.

3. Because of economies of scale, each firm would produce at a higher average cost than before. (They would

each have to build their own power lines.) As a result, they would each have to raise prices to cover their

higher costs. The policy would fail.

4. Shorter patent protection would make innovation less lucrative, so the amount of research and

development would likely decline.

5. If price falls below AVC, the firm will not be able to earn enough revenues even to cover its variable costs. In
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