When comparing two companies, a conventional company facing diminishing returns and a high-tech company with low marginal costs, if both companies sell the same quantity at the same price, the conventional company will make more profit because it has lower average costs than the high-tech company.

Question

Quizplus · Accepted Answer

The high-tech company, with low marginal costs, is likely to have lower average costs when selling the same quantity at the same price compared to the conventional company facing diminishing returns, thus potentially making more profit.

When Comparing Two Companies, a Conventional Company Facing Diminishing Returns