Economics 9708 · AS & A Level · 7.6

7.6 — practice question

Which mix of cost conditions is most likely to create a barrier to entry for a new firm wishing to enter an industry?

  • Afixed costs as a proportion of total costs: high; minimum efficient scale of firms in the industry: high output; level of sunk costs: high
  • Bfixed costs as a proportion of total costs: high; minimum efficient scale of firms in the industry: low output; level of sunk costs: high
  • Cfixed costs as a proportion of total costs: low; minimum efficient scale of firms in the industry: high output; level of sunk costs: low
  • Dfixed costs as a proportion of total costs: low; minimum efficient scale of firms in the industry: low output; level of sunk costs: low

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