An Additional, and Often Very Important Motivating Factor for Adding

question 9

Essay

An additional, and often very important motivating factor for adding new businesses is to complement and strengthen the market position and competitive capabilities of one or more of its present businesses. Explain and give three examples.

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Definitions:

Purely Competitive

A market structure characterized by many small firms producing identical products, where no single firm can influence the market price.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, representing the profit beyond the normal rate of return.

Average Variable Cost

Average variable cost is the total variable cost divided by the quantity of output produced, representing the variable cost per unit of output.

MR = MC Output

The output level where marginal revenue equals marginal cost, indicating the profit-maximizing level of production for a firm.