How Do Economies of Scale Contribute to the Development of an Oligopoly

question 201

Multiple Choice

How do economies of scale contribute to the development of an oligopoly?

• A) Economies of scale make it legally difficult for new firms to enter.
• B) Economies of scale make small-scale producers inefficient.
• C) Economies of scale are based on control of a key resource, without which other firms cannot enter an industry.
• D) Economies of scale are guaranteed when a patent is granted.

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Definitions:

Consumer Goods

Products and services that are consumed by individuals or households for personal satisfaction and daily use.

Capital Goods

Physical assets utilized by businesses to produce goods and services, such as buildings, machinery, and equipment.

Allocation of Resources

The process of distributing scarce resources among various uses or activities in a way that maximizes the achievement of objectives.

Production Possibilities Curve

A visual diagram displaying the highest achievable production combinations of two products or services within an economy, assuming all resources are used completely and effectively.