Refer to the Graph Shown of Average Costs for a Typical

question 216

Multiple Choice

Refer to the graph shown of average costs for a typical firm. If this industry consisted of one firm producing 1,000 units and one firm producing 500 units:

• A) the larger firm probably would be forced out through price competition.
• B) the larger firm would earn higher profit than the smaller firm, but they could both survive indefinitely.
• C) the smaller firm probably would be forced out through price competition.
• D) there is no way to predict which firm would have a competitive advantage.

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Definitions:

Psychological Strain

Psychological strain refers to the stress or tension experienced by individuals due to various psychological pressures or challenges.

Economic Resources

The assets and inputs required for the production of goods and services, including land, labor, capital, and entrepreneurship.

Per Capita GDP

The gross domestic product of a country divided by its population, providing a per person average that helps in comparing economic well-being across different nations.

Population

The total number of people inhabiting a specific area or country.