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Economics
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16 Jan 2018

If an industry is characterized by economies of scale:

the costs of entry into the market are likely to be substantial.
barriers to entry are usually not very large.
long-run average costs of production increase as the quantity the firm produces increases.
capital requirements are small due to the efficiency of the large-scale operations.

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Jarrod Robel
Jarrod RobelLv2
17 Jan 2018
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Related questions

1) A natural monopoly exists when:

a. A few firms collude to make one large firm

b. Firms enter the industry as a result of profit incentives

c. Economies of scale provide large cost advantages to having one firm produce the industry's output

d. Firms naturally maximize regardless of market structure

Ā 

2) A(n) ____ is a single firm with ___, whereas a(n) ___ implies an industry with ____ firm(s) and ____ .

a. Monopoly; barriers to entry; oligopoly; few; no barriers to entry

b. Oligopoly; no barriers to entry; monopoly; many; easy entry and exit

c. Monopoly; barriers to entry; monopolistic competition; many; easy entry and exit

d. Monopolistic competitor; barriers to entry; monopoly; one; barriers to entry

Ā 

3) In monopolistic competition:

a. Each firm produces a product identical to that of every other firm in the industry

b. Firms are aware of their strategic interdependence

c. Firms earn large economic profits in the long run

d. Firms earn zero economic profits in the long run

Ā 

4) A monopolistically competitive industry, such as corn snack chips, and a perfectly competitive industry, like wheat farming, are alike in that:

a. There are many firms in each industry

b. Firms in both types of industries produce similar but not identical products

c. Barriers to entry in both industries are large

d. Firms in both types of industries produce identical products

Many suppliers experience economies of scale as output expands, which implies that long-run average costs are falling. At very high levels of production, however, many firms are likely to experience diseconomies of scale. Why do firms experience diseconomies of scale as they increase production volume? How might firms

Short-run costs are calculated with at least one input fixed and thus with a fixed cost. Long-run costs are calculated with all the inputs variable.

Provide examples and explanations of some of the following short-run and long-run circumstances of "typical" firms:

1) A firm with a small capacity to produce relative to the demand in the market;

2) A firm with a large capacity to produce relative to the demand in the market;

3) A firm that experiences economies of scale as it increases its plant capacity;

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