How do economies of scale contribute to the development of an oligopoly?
A) Economies of scale make it legally difficult for new firms to enter.
B) Economies of scale make small-scale producers inefficient.
C) Economies of scale are based on control of a key resource, without which other firms cannot enter an industry.
D) Economies of scale are guaranteed when a patent is granted.
Answer: B
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Define marginal cost. Is it different from the concept of willingness to accept?
What will be an ideal response?
A tax increase
A) decreases aggregate demand and the AD curve shifts leftward. B) increases aggregate demand and the AD curve shifts rightward. C) decreases the quantity of real GDP demanded and there is a movement up along the AD curve. D) increases the quantity of real GDP demanded and there is a movement down along the AD curve. E) does not shift or lead to a movement along the aggregate demand curve.
Generally speaking, resources are used more wastefully and carelessly when
A) users obtain the resources through the market process. B) users do not have to pay the opportunity cost for using resources. C) users use resources to only advance the projects they are interested in. D) users privately own resources.
Describe the Capital Asset Pricing Model (CAPM) and how it is used in capital budgeting decisions
What will be an ideal response?