In the soda industry,production costs per unit continue to fall as the firm expands.In this type of industry,smaller rivals trying to enter the industry
A) will easily be able to gain market power.
B) have lower average costs.
C) do not have high fixed costs.
D) will have much higher average costs.
E) experience a government-created barrier.

Question

Quizplus · Accepted Answer

In industries where production costs per unit decrease with expansion, larger firms will have lower average costs than their smaller rivals. This means that smaller firms attempting to enter the industry will have much higher average costs and may struggle to compete with the established firms. As a result, D is the correct answer as smaller rivals will have much higher average costs.

In the Soda Industry,production Costs Per Unit Continue to Fall