Economies of Scale Will Create a Barrier to Entry in an Oligopoly

question 189

Multiple Choice

Economies of scale will create a barrier to entry in an oligopoly industry when

• A)a firm's minimum efficient scale occurs where long-run average total costs are constant.
• B)the typical firm's long-run average total cost curve reaches a minimum at a level of output that is a large fraction of total industry sales.
• C)the typical firm's long-run average total cost curve reaches a minimum at a level of output that is a small fraction of total industry sales.
• D)the industry's four-firm concentration ratio is less than 40 percent.

---

Definitions:

Cost of Goods Sold

The direct costs attributable to the production of the goods sold in a company, including the cost of materials and labor.

Net Sales

The amount of revenue from sales after deducting returns, allowances for damaged or missing goods, and discounts.

Comprehensive Income

The total change in equity for a reporting period other than from transactions with owners, including all unrealized gains and losses.

Balance Sheet

A financial statement that reports a company's assets, liabilities, and stockholders' equity at a specific point in time, providing insights into its financial health and stability.