Consider an Industry with Two Firms Producing Similar Products

question 122

Multiple Choice

Consider an industry with two firms producing similar products. Each firm's total cost (in dollars) is given below. Mega Corp: TC = 5,000 + 100Q
Big Inc: TC = 4,000 + 200Q
If each firm produces 10 units, Mega Corp's total cost will be ________, and Big Inc's total cost will be ________.

• A)$6,000; $6,000
• B)$5,000; $4,000
• C)$5,100; $4,200
• D)$15,000; $14,200

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Definitions:

Output Level

Refers to the total quantity of goods or services that a firm produces over a specific period.

Scarce Factor

A resource or input in limited supply relative to demand, which can constrain production, increase costs, or cause competition.

Diamond Monopoly

A diamond monopoly refers to a market structure where a single firm has exclusive control over the production and sale of diamonds.

Barriers To Entry

Obstacles that make it difficult for new competitors to enter a market, such as high start-up costs, complex regulations, or strong brand loyalty among consumers.