Barriers to Entry are designed to prevent potential competitors from entering the market. Some barriers to entry are placed by the government, while others could be related to cost. These barriers result in different market structures such as monopolies or oligopolies (a few firms).
There are three different Theories of Efficiency that we are going to focus on. The first Theory of Efficiency is Pareto efficiency or Pareto optimality. The second is the Kaldor–Hicks improvement, and lastly the Zero-profit condition or Zero Profit Theorem.
Durable goods are those goods that don’t wear out quickly and last over a long period. While non-durable goods or soft goods are those goods that have a short life cycle.
The Theory of Production explains the principles by which a business firm decides how much of each commodity that it sells it will produce. And how much of each kind of labor, raw material, fixed capital goods, etc., that it employs it will use.
In the Cost Theory, there are two types of costs associated with production – Fixed Costs and Variable Costs.