Given the structure of the automobile industry, entering the auto manufacturing industry seems risky. Yet Tesla Motors joined the fray. Rather than attempting to compete head-on with internal combustion engines, Tesla Motors entered the all-electric car segment, a much less crowded niche in the overall car industry. Which of the following is Tesla most hoping to benefit from in this market niche?
a. network effects
b. economies of scale
c. customer switching costs
d. capital requirements

Question

29-01-2020
Social Studies

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Given the structure of the automobile industry, entering the auto manufacturing industry seems risky. Yet Tesla Motors joined the fray. Rather than attempting to compete head-on with internal combustion engines, Tesla Motors entered the all-electric car segment, a much less crowded niche in the overall car industry. Which of the following is Tesla most hoping to benefit from in this market niche?
a. network effects
b. economies of scale
c. customer switching costs
d. capital requirements

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mandhlelaz mandhlelaz · Answer 1 · 2020-01-29T10:48:11+01:00

Answer:b. economies of scale

Explanation:What Are Economies of Scale?

Economies of scale refers to the benefits reaped by the companies when their product is running efficiently and effectively.

This can be achieved through an increased in production and lowering of cost.

The magnitude of the business matters the most when it comes to achieving economies of scale , if the business get bigger the more the cost it saves.

Rather than attempting to compete head-on with internal combustion engines, Tesla Motors entered the all-electric car segment, a much less crowded niche in the overall car industry. This shift of not competing means they will be able to produce more of their product efficiently because they are doing their own thing differently.