Suppose a Single Firm Can Produce 100 Units at an Average

question 73

Multiple Choice

Suppose a single firm can produce 100 units at an average cost of $15. If two firms produce 50 units each, the total cost rises to $2,500. Which of the following is true about this market?

• A) The demand for this product will be higher if there are two firms producing the product than if there is only one.
• B) It is more efficient to have two firms so they each have a competitor.
• C) Neither firm can make a profit.
• D) It is a natural monopoly.

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Definitions:

Prejudice

A preconceived opinion or judgment formed without just grounds or before sufficient knowledge, often based on stereotypes.

Instinct Approach

A theory in psychology that suggests innate, biologically driven behaviors are the primary motivators for human actions.

Motivation

A psychological force that compels you to take action toward achieving your goals.

Kinsey

An American biologist and sexologist who is known for his research on human sexuality in the mid-20th century.