If the Minimum Efficient Scale of Production Is Small Relative

question 34

Multiple Choice

If the minimum efficient scale of production is small relative to the size of a market,then

• A)the industry will tend to be highly concentrated
• B)there will be much strategic interdependence among the sellers in the industry
• C)the industry is unlikely to be an oligopoly
• D)it is more likely that sellers in the industry will successfully collude
• E)there will be much merger activity in the industry

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Definitions:

Support Department Costs

Support Department Costs are expenses incurred by service departments within a company, such as human resources or maintenance, that do not directly contribute to revenue but provide essential support to profit-making operations.

Indirectly Related

Pertaining to elements or factors that have an influence on a situation or outcome but are not a direct cause or effect.

Overhead Rate

The overhead rate is a calculation used to determine how much of indirect costs (overhead) a business should allocate to each unit of production or service.

Multiple Production

This term could refer to the operation of producing goods in multiple quantities or varieties, but it's not a standard accounting or business term. Likely, it means batch or mass production processes.