The cost leader in network supply in the telecommunications market is Huawei, a Chinese ﬁrm. Given this information, which of the following could be true?
A) Firms in the telecommunications market earn supernormal proﬁts.
B) Huawei is likely to have gained economies of scale by cutting costs.
C) Other ﬁrms in the telecommunications market are likely to compete with Huawei on price.
D) Huawei is likely to report falling revenues and negative cash ﬂows.

Question

Quizplus · Accepted Answer

Huawei being a cost leader suggests it has effectively managed to reduce its costs, likely through economies of scale, which allows it to produce at a lower cost per unit as production increases.

The Cost Leader in Network Supply in the Telecommunications Market