Economies of scale can
A) result in an increasing cost industry.
B) cause input prices to drop.
C) prevent the entry of new firms into a market.
D) reduce the rate of return which the firm may earn.

Question

Quizplus · Accepted Answer

Economies of scale can create barriers to entry for new firms because established firms can produce at a lower average cost due to their larger scale of operation, making it difficult for new entrants to compete on price.

Economies of Scale Can