If economies of scale are an industry's primary entry barrier,a new entrant's major risk is
A) its inability to access labor and materials.
B) the inferior quality of its products.
C) its inability to match the innovation of the established firm.
D) its inability to produce in sufficient volume to match the cost advantages of established producers.
E) its inability to get buyers to switch to its product.

Question

Quizplus · Accepted Answer

If economies of scale are the primary entry barrier, established producers have cost advantages due to their ability to produce in large volumes. A new entrant may not be able to produce in sufficient volume to match their cost advantages, making it risky for them to enter the market.

If Economies of Scale Are an Industry's Primary Entry Barrier,a