Economics (AS & A Level) · Oct / Nov 2024 · Paper 31 · Question 5
9708Growth and survival of firms
The diagram shows the average revenue (AR) and average cost (AC) curves for a firm X that manufactures electronic goods. Firm X then completes a takeover of firm Y that supplies its component parts making them cheaper. The original average revenue and average cost curves of firm X are AR1 and AC1. What is the position of the average cost curve and the average revenue curve after the takeover?
- AAC1, AR3
- BAC2, AR1
- CAC2, AR3
- DAC3, AR2
As printed in the paper
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Correct answer: B. AC2, AR1
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