Economies of scale as a barrier to entry.
Concept Introduction:
Economies of scale refer to the benefit achieved by the big entity over the small entity, because of producing in much effective and cost saving way.Larger the entity, lower is the cost.
Explanation of Solution
If the increase in production results in a decrease in
The economies of scale are mostly enjoyed by the already existing firm, who have decreased its cost of production by using its resources in a most efficient way and by reducing its average total cost. The new firm cannot use its resources with that much efficiency and it cannot even reduce its cost of production, as much already existing firm can. Thus, a new firm cannot compete with the already existing firm and cannot gain economies of scale. Therefore, entry of new firm is restricted because of economies of scale.
Want to see more full solutions like this?
Chapter 9 Solutions
Bundle: ECON MICRO, 5th + Aplia, 1 term Printed Access Card
- General Accounting Question solution and give me Blank ? Carrow_forwardIt is possible to use transformational leadership strategies to reach unethical objectives. Traditional leadership theories and morals standards are not adequate to help employees solve complex organizational issues. For the statement above, argue in position for both in favor or opposed to the statements.arrow_forwardDiscuss the preferred deterrent method employed by the Zambian government to combat tax evasion, monetary fines. As noted in the reading the potential penalty for corporate tax evasion is a fine of 52.5% of the amount evaded plus interest assessed at 5% annually along with a possibility of jail time. In general, monetary fines as a deterrent are preferred to blacklisting of company directors, revoking business operation licenses, or calling for prison sentences. Do you agree with this preference? Should companies that are guilty of tax evasion face something more severe than a monetary fine? Something less severe? Should the fine and interest amount be set at a different rate? If so at why? Provide support and rationale for your responses.arrow_forward
- answerarrow_forwardDiscuss the preferred deterrent method employed by the Zambian government to combat tax evasion, monetary fines. As noted in the reading the potential penalty for corporate tax evasion is a fine of 52.5% of the amount evaded plus interest assessed at 5% annually along with a possibility of jail time. In general, monetary fines as a deterrent are preferred to blacklisting of company directors, revoking business operation licenses, or calling for prison sentences. Do you agree with this preference? Should companies that are guilty of tax evasion face something more severe than a monetary fine? Something less severe? Should the fine and interest amount be set at a different rate? If so at why? Provide support and rationale for your responses.arrow_forwardNot use ai pleasearrow_forward
- For the statement below, argue in position for both in favor or opposed to the statement. Incompetent leaders can't be ethical leaders. Traditional leadership theories and moral standards are not adequate to help employees solve complex organizational issues.arrow_forwardpresentation on "Dandelion Insomnia." Poemarrow_forwardDon't used Ai solutionarrow_forward
