Which is a negative of economies of scale?

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Multiple Choice

Which is a negative of economies of scale?

Explanation:
Economies of scale occur when increasing production lowers average costs because fixed costs are spread over more units and the firm can gain efficiency. That cost advantage can create barriers to entry for new firms: incumbents can undercut prices or sustain higher profitability because their lower costs make it hard for newcomers to compete on price. So the negative aspect of economies of scale is the barrier to entry it helps establish. The other options describe benefits of larger scale—lower unit costs, more profits, and efficient production—which are positive effects rather than negatives.

Economies of scale occur when increasing production lowers average costs because fixed costs are spread over more units and the firm can gain efficiency. That cost advantage can create barriers to entry for new firms: incumbents can undercut prices or sustain higher profitability because their lower costs make it hard for newcomers to compete on price. So the negative aspect of economies of scale is the barrier to entry it helps establish.

The other options describe benefits of larger scale—lower unit costs, more profits, and efficient production—which are positive effects rather than negatives.

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