If the minimum efficient scale of production is small relative to the size of a market,then
A)the industry will tend to be highly concentrated
B)there will be much strategic interdependence among the sellers in the industry
C)the industry is unlikely to be an oligopoly
D)it is more likely that sellers in the industry will successfully collude
E)there will be much merger activity in the industry

Question

Quizplus · Accepted Answer

If the minimum efficient scale of production is small relative to the size of the market, it means that there is room for many firms to enter the market and operate efficiently. This reduces the likelihood of concentration and oligopoly behavior.

If the Minimum Efficient Scale of Production Is Small Relative