Why would economies of scale be a barrier to entry?

What will be an ideal response?


If significant economies of scale exist in an industry, then the long-run average costs can decline over a wide range of output rates so that it may not be profitable for more than one firm to exist in that industry. This is the case of a natural monopoly, which is able to underprice potential competitors and keep them out of the market.

Economics

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Refer to Figure 9-4. Suppose the government allows imports of leather footwear into the United States. The market price falls to $24. What area represents domestic producer surplus?

A) T + U B) V + W + X + Y C) W + X + Y D) V

Economics

Economists include both explicit and implicit costs while accountants include only implicit costs

a. True b. False Indicate whether the statement is true or false

Economics

How are positive analysis and normative analysis similar?

a. Both use testable statements. b. Both deal with future concerns. c. Both use ethical values. d. Both deal with past events.

Economics

If you were interested in charting prices of resources used by producers of energy, which of the following would you use?

A. The GDP deflator. B. The Producer Price Index (PPI). C. The Consumer Price Index (CPI). D. The Cost of Living Adjustment (COLA).

Economics