Managers Should Not Become Complacent About Efficiency-Based Cost Advantages Because

question 44

Multiple Choice

Managers should not become complacent about efficiency-based cost advantages because:

• A) both learning effects and economics of scale go on forever.
• B) the experience curve is likely to bottom out at some point.
• C) cost advantages gained from experience effects are not affected by the development of new technologies.
• D) unit costs keep reducing as output increases.
• E) the experience curve steadily rises after a certain threshold is reached indicating an increase in unit costs.

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Definitions:

Oligopoly

A market structure in which a small number of firms dominate the market, leading to limited competition and possibly higher prices for consumers.

Market Power

The ability of a firm or group of firms to influence or control prices and total market output.

Restrict Advertising

The imposition of limitations on the timing, nature, or content of commercial advertising.

Economic Incentives

Motivations or rewards intended to encourage particular economic behaviors among individuals or organizations.