If Economies of Scale Are an Industry's Primary Entry Barrier

question 43

Multiple Choice

If economies of scale are an industry's primary entry barrier, a new entrant's major concern is:

• A)its inability to counter brand loyalty that customers have for established companies in the industry.
• B)the inferior quality of its products.
• C)its inability to match the innovation of the established finn.
• D)its inability to produce in sufficient volume to match the cost advantages of established producers.
• E)its inability to get buyers to switch to its product.

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Definitions:

Equipment

Machinery, tools, or other items that are necessary for the production of goods or services.

Equity Method

An accounting technique used to record investments in other companies where the investor has significant influence but does not have full control.

Equity Method

An accounting technique used to record the investments in other companies where the investor has significant influence but does not fully control the investee.

Excess Amortizations

Excess Amortizations refer to the amount by which amortization expenses exceed what is deemed necessary or standard for a given period, often adjusting the value of intangible assets.