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Which of the following industry characteristics is not a cause of market concentration? Requirement to work...

Which of the following industry characteristics is not a cause of market concentration?

Requirement to work hard

High Sunk costs (a historical investment in asset that has very little value apart from its use in an industry)

Economies of scale

Barriers to entry
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Answer #1

Answer: 1st option

Market concentration indicates market share of customers by few firms only. If there is market concentration, the working hard for getting customers is not required since the market is captured by the firms. Therefore, this option is the odd one.

Other options are not relevant:

2nd option: if the sunk cost is high the market is less competitive, meaning high concentration.

3rd option: if the concentration is high, firms enjoy reduction in cost with higher production, indicating the economies of scale.

4th option: entry of new firms are artificially restricted if there is high concentration.

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