Author Question: The situation in the figure above creates a barrier to entry for a second firm because i. a ... (Read 169 times)

cnetterville · **on:** Jun 29, 2018

The situation in the figure above creates a barrier to entry for a second firm because

i. a second firm that produced as many kilowatt-hours as the first firm would see the market price fall beneath its cost and would incur an economic loss.
ii. a second firm that produced fewer kilowatt-hours than the first firm would have to charge a higher price and would not gain many customers.
iii. the first firm's average total cost curve indicates it has been given a patent for the product.
A) i only
B) ii only
C) iii only
D) i and ii
E) i and iii

Question 2

The figure above shows the U.S. demand and U.S. supply curves for cherries. Suppose the world price of cherries is 2 per pound. At this price, U.S. consumption of cherries will equal

A) 200,000 pounds.
B) 400,000 pounds.
C) 600,000 pounds.
D) 800,000 pounds.
E) 0 pounds.