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:

Offensive Tool

A strategy or instrument used to proactively address challenges or pursue objectives aggressively.

Defensive Tool

Techniques or strategies employed to protect oneself, one's interests, or one's assets from threats or loss.

Bargaining Power

The capacity of one negotiating party to influence the terms of negotiation by leveraging its assets, status, or situation.

Shareholders

Individuals or entities that own one or more shares of stock in a company, giving them a portion of the company’s ownership and possibly influence over its decisions.