The figure above shows a firm's demand and average total cost curves.
-The situation in the figure above creates a barrier to entry for a second firm because
i.a second firm that produced as many kilowatt-hours as the first firm would see the market price fall beneath its cost and would incur an economic loss.
ii.a second firm that produced fewer kilowatt-hours than the first firm would have to charge a higher price and would not gain many customers.
iii.the first firm's average total cost curve indicates it has been given a patent for the product.
Definitions:
Lucrative
Generating a significant profit or financial gain, often used to describe business ventures or investments.
CRM Program
A strategy and software system designed to manage a company’s interactions with current and potential customers, aiming to improve business relationships.
Lifetime Value
The total revenue a business can expect from a single customer throughout the duration of their relationship.
Customer Equity
The total combined customer lifetime values of all the company’s customers, representing the financial value of the customer base.
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