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If an industry is characterised by economies of scale then
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- barriers to entry are not very large
- long run unit costs of production decreases as the quantity the firm produces increases
- capital requirement are small due to the efficiency of the large scale operation
- the costs of entry into the market are likely to be substantial
- barriers to entry are not very large
Correct Option: B
In microeconomics, economies of scale are the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer’s average cost per unit to fall as the scale of output is increased. “Economies of scale” is a long run concept and refers to reductions in unit cost as the size of a facility and the usage levels of other inputs increase.
