Consider an Industry in Which, for Each Individual Firm in the Industry

question 163

Multiple Choice

Consider an industry in which, for each individual firm in the industry, cost per unit of output declines as the individual firm's output increases. If there is an increase in the number of firms in this industry whereas the market size stays the same, then the

• A)marginal cost at each firm decreases because each firm produces more.
• B)average total cost at each firm increases because each firm produces less.
• C)marginal cost at each firm increases because each firm produces more.
• D)average total cost at each firm decreases because each firm produces more.
• E)average total cost at each firm decreases because each firm produces less.

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Definitions:

Daily Basis

A timeframe or scheduling period where actions or activities are performed on a day-to-day basis.

Fabricating Department

A section within a manufacturing company where raw materials are transformed into components or products through various processes like cutting, welding, and assembly.

Production Requirements

The specific criteria or conditions needed to manufacture or produce goods, including materials, labor, and technology.

Regular Machines

Standardized machines typically used in manufacturing or production processes with specific, repetitive tasks.