Under which of the following conditions would higher market share be most likely to produce higher profits?
A)when production volume drops as market share increases
B)when unit costs drop as market share increases
C)when production volume increases as market share increases
D)when unit costs increase as market share increases
E)when the company charges a break- even price

Question

Quizplus · Accepted Answer

When unit costs drop as market share increases, the company can command higher prices and increase profits. This is because the company is achieving economies of scale and spreading fixed costs over more units, which lowers the cost per unit.

Under Which of the Following Conditions Would Higher Market Share