How Do Economies of Scale Result in Barriers to Entry

question 24

Essay

How do economies of scale result in barriers to entry into an oligopolistic market structure?

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Definitions:

Higher Taxes

Increased rates or amounts of taxes imposed by governments on individuals, corporations, or transactions.

Inelastic

Inelastic refers to a situation in which the quantity demanded or supplied of a good or service is relatively unresponsive to price changes.

Quantity Demanded

The total amount of a good or service that consumers are willing to purchase at a specific price level, at a given point in time.

Elasticity Coefficient

A numeric value that measures the responsiveness of the quantity demanded or supplied of a good to a change in one of its determinants, such as price.