A barrier to entry as the name indicates is whatever factors that are in place that prevent some companies from entering an industry. The most common barrier to entry is cost. As mentioned in an earlier post, a company will continue to do business only as long as marginal cost exceeds marginal benefit. It is possible for an entry cost to be so high that no business occurs at all. The barrier will keep out some companies and let others though. Competition is thus lowered. Therefore, assuming all else is held equal, price goes up and quality goes down.
To make a widget, it requires raw materials. It takes 50 dollars of raw materials to make one widget. That 50 dollars is a potential barrier to entry. Let’s say there’s two people. Person A has only 1 dollar in their bank account, and person B has 60 dollars in their bank account. That 50 dollar materials fee (in order to buy the materials needed for the first widget) will keep person A out of the widget making business but person B will be able to enter the business.
|Rate||Assets Under Management|
|1.00%||Between $125,000 and $750,000|
|.85%||Between $750,000 and $1,250,000|
|.80%||Between $1,250,000 and $1,750,000|
|.75%||Between $1,750,000 and $2,500,000|
|.70%||Between $2,500,000 and $3,250,000|
|.65%||Between $3,250,000 and $4,250,000|
A single rate is applied to the entire account. So a person with a $750,000.01 account pays less than a person with a $750,000 account. I will waive personal tax return fees for accounts over $1 million. For accounts that are above $5,250,000, we’ll need to discuss a custom rate.
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Questions for the comments
Did my explanation make sense? Do you agree or disagree with what I said?