The economic advantage of a large firm over its smaller competitors arises primarily from
A) its ability to prevent others from holding new patents.
B) economies of scale.
C) its ability to prevent others from buying key inputs.
D) its larger advertising budget.
E) its ability to get celebrities to help promote their products.

Question

Quizplus · Accepted Answer

Economies of scale allow larger firms to produce goods or services at a lower cost per unit than their smaller competitors. This cost advantage can make it difficult for smaller firms to compete on price and can lead to a larger market share for the larger firm. The other options listed do not provide as significant an economic advantage for a large firm over its smaller competitors.

The Economic Advantage of a Large Firm Over Its Smaller