8. Questions and Problems 16People often argue that large firms in an industry have cost advantages over small firms in the same industry. For example, they might assert that abig oil company must have a cost advantage over a small oil company.For this to be true, what condition must exist?O There are no economies of scale.There is no necessary condition for large firms to have a cost advantage over small firms.There are economies of scale, and the small firm is operating at an output level at which economies of scale exist.O There are economies of scale, and the large firm is operating at an output level at which economies of scale exist.

Economies of scale refer to state production where firms' costs start to fall as more and more goods…

People often argue that large firms in an industry have cost advantages over small firms in the same industry. For example, they might assert that a big oil company must have a cost advantage over a small oil company. For this to be true, what condition must exist? O There are no economies of scale. O There is no necessary condition for large firms to have a cost advantage over small firms. O There are economies of scale, and the small firm is operating at an output level at which economies of scale exist. O There are economies of scale, and the large firm is operating at an output level at which economies of scale exist.