Imagine You Are Creating a New Product to Sell in an Up-And-Coming

question 183

Multiple Choice

Imagine you are creating a new product to sell in an up-and-coming market. Which of the below statements indicates that it would be easy for you as the new entrants to compete in this market?

• A)The threat of new entrants' force is high in the up-and-coming market.
• B)The threat of new entrants' force is low in the up-and-coming market.
• C)The threat of new entrants' force is impossible to define in the up-and-coming market.
• D)All of the above depending on the time of year.

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Definitions:

Perfectly Competitive Firm

A company that operates in a market where there are many buyers and sellers, no barriers to entry or exit, and the firm sells a homogeneous product.

MR

The extra revenue that a firm gains when it sells an additional unit of output, essentially another term for marginal revenue.

AVC

Average Variable Cost, the total variable costs divided by the quantity of output produced.

ATC

Average Total Cost; the total cost per unit of output, calculated by dividing the total cost by the quantity of output produced.