Assume That There Is Only One Firm Producing Electric Toothbrushes

question 64

Multiple Choice

Assume that there is only one firm producing electric toothbrushes and the firm's demand curve is the same as the market demand curve.If a second firm that also produces electric toothbrushes enters the market,the profit of the first firm decreases because

• A) the competition between the two firms causes the price to go down.
• B) it produces less electric toothbrushes.
• C) its average cost of production rises due to higher demand.
• D) Both A and B are correct.

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Definitions:

Progesterone

A steroid hormone involved in the menstrual cycle, pregnancy, and embryogenesis of humans and other species.

Estrogens

Female sex hormones produced by the ovary; promote the development and maintenance of female reproductive structures and of secondary sex characteristics.

Prolactin

A hormone produced by the anterior pituitary gland that stimulates milk production after childbirth and affects many other functions in the body, including metabolism, immune system regulation, and water and electrolyte balance.

Glycoproteins

Proteins that have carbohydrate groups attached to the polypeptide chain, involved in various biological processes, including cell-cell recognition and immune responses.