In Some Industries Where Firms Experience Declining Average Total Costs

question 169

Multiple Choice

In some industries where firms experience declining average total costs over the full range of output that consumers are willing to buy,

• A) a smaller firm will always have lower per-unit costs.
• B) many firms will tend to emerge from the competitive process.
• C) a single large firm will develop, and it will have cost advantages that protect it from potential rivals.
• D) a single large firm will develop, and it will buy out any smaller rival firms to avoid the small firms' production at a lower per-unit cost.

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Definitions:

Right-to-Work Laws

Right-to-work laws are statutes in some U.S. states that prohibit union security agreements between companies and workers' unions, ensuring that employment is not conditioned on union membership or related fees.

Monopsony

A market condition where there is only one buyer for many sellers, giving the buyer significant power over prices and terms.

Union Shop

A workplace where employees are not required to join the union to be hired, but must join shortly after commencing employment and remain members for as long as they are employed there.

Company Towns

Communities where nearly all stores and housing are owned by the one company that is also the main employer.