Asked by America Becerra on Jun 09, 2024
Verified
The MOST important source of oligopoly in an industry is:
A) economies of scale.
B) government regulation.
C) technological inferiority.
D) ownership of plentiful resources.
Economies of Scale
The reduction in per-unit cost as the volume of production increases, due to factors like specialization and bulk purchasing.
Oligopoly
A market structure characterized by a small number of large firms that dominate the market, leading to limited competition and the potential for collusion or price setting.
Government Regulation
The laws and rules put in place by the government to control the way businesses can operate, often with the aim of protecting consumers, workers, and the environment.
- Comprehend the role of economies of scale as a source of oligopoly.
Verified Answer
JN
Janette NicoleJun 10, 2024
Final Answer :
A
Explanation :
Economies of scale allow larger firms to operate more efficiently and at lower costs than smaller firms, which creates barriers to entry for potential competitors. This leads to a concentration of market power among a few large firms, resulting in an oligopoly. Government regulations, technological inferiority, and ownership of plentiful resources may also contribute to oligopoly, but economies of scale are generally considered the most important factor.
Learning Objectives
- Comprehend the role of economies of scale as a source of oligopoly.