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Economies of Scale Can Lead to an Oligopolistic Market Structure

Question 24

Multiple Choice
Economies of scale can lead to an oligopolistic market structure because

Economies of scale can lead to an oligopolistic market structure because


A) if larger firms have lower costs, new small entrants will not be able to produce at the low costs achieved by the big established firms.
B) if economies of scale are insignificant, only a few firms are able to produce at the low costs achieved by the big established firms.
C) a few firms can force rivals to produce at low levels of output.
D) a few firms can use high profits to keep out new entrants.

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