Question

When Hutamaki entered the U.S. market for paper cups and containers it utilized technology and production processes with large economies of scale. As a result, Hutamaki’s average total cost per cup produced was lower than the production cost of the smaller cup producers who were in the market before Hutamaki’s arrival. Which of the following is the most likely result of these economies of scale? A. Hutamaki has a monopoly on the market for paper cups and containers. B. The demand curve for paper cups has shifted to the left causing the price of cups to decline. C. There is a smaller number of firms producing cups than before Hutamaki’s arrival. D. All of the above.

Answer 1

Ans) the correct option is A. Hutamaki has a monopoly on the market for paper cups and containers.

since Hutamaki can produce at lower average cost per unit of output than a number of smaller firms producing a similar amount of total output so it has a monopoly

Answer 2

When Hutamaki entered the U.S. market for paper cups and containers it utilized technology and production processes with large economies of scale. As a result, Hutamaki’s average total cost per cup produced was lower than the production cost of the smaller cup producers who were in the market before Hutamaki’s arrival. Which of the following is the most likely result of these economies of scale? A. Hutamaki has a monopoly on the market for paper cups and containers. B. The demand curve for paper cups has shifted to the left causing the price of cups to decline. C. There is a smaller number of firms producing cups than before Hutamaki’s arrival. D. All of the above.