Question

Online booksellers have captured a very large portion of the retail book market over the past several years. Companies that have a large online presence, such as Amazon and Barnes & Noble now dominate this market. Over the past 15 years, the number of independent bricks and mortar bookstores has fallen from more than 4,500 to about 1,500. Briefly explain what role costs may have played in explaining the large decline in independent booksellers Source: Alex Beam, "Where Have All the Bookstores Gone?" New York Times, February 20, 2009 The number of independent booksellers may have declined all independent booksellers A because the total cost of production for large booksellers is less than the total cost of production for O B. because the minimum efficient scale of production for booksellers is low OC because the long-run average cost of production for booksellers is decreasing OD because booksellers incur large sunk costs O E because boosters experience disconomies of scale

Answer 1

"A"

large sellers in the market are getting economies of scale and their cost of production is less than the small sellers so smaller ones are driven out of the market.