When Products Are Differentiated by Location,what Kind of Trade-Offs Exist

question 17

Multiple Choice

When products are differentiated by location,what kind of trade-offs exist?

• A) Firms that sell the same product at different locations have a monopoly in their location, and buyers pay a higher price.
• B) the larger the numbers of firms that sell the same product at different locations, the higher the level of variety
• C) the smaller the numbers of firms that sell the same product at different locations, the higher the average cost of production
• D) the larger the numbers of firms that sell the same product at different locations, the higher the average cost of production

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Definitions:

Opportunity Cost

The value of the next best alternative that is foregone as a result of making a particular decision.

Accounting Profits

The total revenues of a business minus the explicit costs, essentially the net income on the financial statements.

Total Revenue

The total income received by a firm from its sales of goods or services, calculated as the quantity sold multiplied by the selling price.

Barriers to Entry

Factors that prevent or hinder new competitors from easily entering an industry or area of business.