Answers to Problems
As shown in the following table, Volvo’s greater production volume gives it
substantially lower average production cost, and this advantage helps explain why
Volvo’s market share has in fact been growing relative to Saab’s.
Average cost per car
AACSB: Analytical Skills
demand curve is downward sloping in both cases, but from
the individual perfectly competitive firm’s point of view, the demand curve is
Because the individual firm is too small to affect the market price, it
can sell as many units as it wishes at that price.