For a company planning to enter a task environment or industry, the greater the economies of scale within that task environment,
A)the higher will be the barriers to entry.
B)the smaller will be the investment.
C)the easier it will be to create brand loyalty.
D)the higher will be tariff rates.

Question

Quizplus · Accepted Answer

Economies of scale refer to the cost advantages that a business obtains due to expansion. When economies of scale are significant, it means that existing companies can produce at a lower cost per unit, creating a barrier for new entrants who cannot achieve these lower costs immediately. This makes it harder for new companies to compete, thus raising the barriers to entry.

For a Company Planning to Enter a Task Environment or Industry