In an industry characterized by extensive economies of scale:

A) small companies are more profitable than are large companies.
B) large companies are more profitable than are small companies.
C) small and large companies are equally profitable.
D) small companies will drive out large companies.

Economies of Scale

The cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units.

Profitable

A financial status where the income or revenue generated exceeds the costs or expenses, resulting in a financial gain.