An Insurmountable Barrier to Entry Can Enable a Firm to Produce

question 142

Multiple Choice

An insurmountable barrier to entry can enable a firm to produce a quantity at which its _______ exceeds its ______in the long run.

• A)marginal cost; marginal revenue
• B)marginal cost; price
• C)average total cost; price
• D)price; average total cost

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Definitions:

Marginal Cost

The supplementary cost that arises when one additional unit of a product or service is produced.

Marginal

Term used to describe the effects of a change in the current situation. For example, a producer’s marginal cost is the cost of producing an additional unit of a product, given the producer’s current facility and production rate.

Average Increasing

A situation in which the average cost of production goes up as the quantity produced increases.