Which of the following is important in determining the extent of competition in an industry?

Question

Quizplus · Accepted Answer

The minimum efficient scale of production relative to market demand is important in determining the extent of competition in an industry because it determines the number of firms that can profitably operate in the industry. If the minimum efficient scale of production is large relative to market demand, then only a few firms will be able to operate profitably, and the industry will be concentrated. If the minimum efficient scale of production is small relative to market demand, then many firms will be able to operate profitably, and the industry will be competitive.

Which of the Following Is Important in Determining the Extent