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.

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Definitions:

Money Multiplier

The ratio that measures the maximum amount of commercial bank money that can be created by a given unit of central bank money.

Fed

The Federal Reserve System, which is the central bank of the United States, responsible for monetary policy.

Bonds

Fixed-income investments representing loans made by an investor to a borrower, typically corporate or governmental, where the borrower agrees to pay back the borrowed funds with interest at a later date.

Money Multiplier

A factor that quantifies the amount of money the banking system generates with each unit of reserves.