The cost advantages of established, large-scale producers in a market might be overcome by a new entrant who can:
A)increase market demand.
B)push the market price down.
C)convince the government to stop issuing new patents.
D)develop a new, low-cost, small-scale production technology.

Question

Quizplus · Accepted Answer

Developing a new, low-cost, small-scale production technology can help a new entrant overcome the cost advantages of established, large-scale producers. This would allow the new entrant to produce goods at a lower cost, and therefore be able to compete on price with the established producers. Increasing market demand (choice A) may help grow the market, but would not necessarily help a new entrant compete with established producers on cost. Similarly, convincing the government to stop issuing new patents (choice C) would not necessarily help a new entrant compete on cost. Pushing the market price down (choice B) may help the new entrant gain market share, but would not necessarily help them overcome the cost advantages of established producers.

The Cost Advantages of Established, Large-Scale Producers in a Market