When It Takes One Firm in an Industry to Produce

question 188

Multiple Choice

When it takes one firm in an industry to produce the quantity necessary to realize low unit costs, the industry

• A) experiences economies of scale.
• B) has barriers to entry due to ownership of resources.
• C) has no barrier to entry.
• D) has a license granted by the government.

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Definitions:

Spot Rate

The current market price of a financial instrument or commodity available for immediate purchase and delivery.

Receivable

An amount owed to a company by its customers or other parties for goods or services delivered.

SPEs

Special Purpose Entities, legal structures created to fulfill specific objectives, often used in financial transactions to isolate financial risk.

Reporting Entity

An entity or business that is required to prepare financial statements in accordance with regulatory guidelines.