How do economies of scale contribute to the development of an oligopoly?
A) Economies of scale make it legally difficult for new firms to enter.
B) Economies of scale make small-scale producers inefficient.
C) Economies of scale are based on control of a key resource, without which other firms cannot enter an industry.
D) Economies of scale are guaranteed when a patent is granted.
B
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By internal balance, most economists mean
A) full employment. B) price stability. C) full employment and price stability. D) full employment and moderate increase in prices. E) full employment and high disposable income.
In a Bertrand model, graphically, the intersection of all firms' best-response curves determines
A) the Nash equilibrium prices. B) the dominant strategy for each firm. C) the degree of product differentiation. D) the price of the market leader.