Increasing returns to scale in an industry:
A)give all businesses a competitive advantage
B)increase a business's chance of becoming larger in size
C)generally means that businesses are relatively small
D)lead to an increase in small business entries within the industry
E)are more common in resource-based industries

Question

Quizplus · Accepted Answer

Increasing returns to scale means that as a company grows, its production costs decrease, leading to higher profits. This gives larger businesses a competitive advantage over smaller ones and incentivizes businesses to become larger in size to benefit from these increasing returns to scale.

Increasing Returns to Scale in an Industry