When it takes one firm in an industry to produce the quantity necessary to realize low unit costs, the industry
A) experiences economies of scale.
B) has barriers to entry due to ownership of resources.
C) has no barrier to entry.
D) has a license granted by the government.

Question

Quizplus · Accepted Answer

When it takes one firm to produce the quantity necessary to achieve economies of scale, it means that the cost per unit decreases as the output increases. This leads to a competitive advantage for the firm, which would make it difficult for new firms to enter the market, creating a barrier to entry.

When It Takes One Firm in an Industry to Produce