Consider an industry with two firms producing similar products. Each firm's total cost (in dollars)is given below. Acme Manufacturing: TC = 100 + 3Q.
Generic Industries: TC = 500 + 3Q.
Which of the following statements is true?
A)Acme has a lower marginal cost than does Generic.
B)Acme and Generic have the same marginal cost.
C)Marginal cost at each firm depends on the level of output.
D)Acme has greater economies of scale than does Generic.

Question

Quizplus · Accepted Answer

Both firms will experience a $3 increase in total cost for each one-unit increase in Q.

Consider an Industry with Two Firms Producing Similar Products