When a firm experiences improvements in efficiency as it incrementally increases its size, the firm is said to have created which of the following barriers to entry?
A) economies of switching
B) economies of scope
C) economies of scale
D) economies of distribution

Question

Quizplus · Accepted Answer

When a firm experiences improvements in efficiency as it incrementally increases its size, the firm is said to have created economies of scale. This means that the firm's cost per unit decreases as it produces more units. This creates a barrier to entry for new firms as they may not have the resources to achieve the same level of efficiency and cost savings.

When a Firm Experiences Improvements in Efficiency as It Incrementally