An experience curve acts as an entry barrier because
A) companies with industry experience know their customers better.
B) industry participants gain a cost advantage from cumulative production over potential entrants.
C) it allows industry incumbents to spread their fixed costs over a larger volume of production.
D) the federal government assigns experience curves to industries where it wishes to deter foreign competition.

Question

Quizplus · Accepted Answer

Industry participants gain a cost advantage from cumulative production, which makes it difficult for new entrants to compete on price, thus acting as an entry barrier.

An Experience Curve Acts as an Entry Barrier Because