The following graph illustrates the average total cost curves for two automobile manufacturing firms: Little Auto and Big Auto. Under which of the following conditions would you expect to see the market composed of firms like Little Auto, and under which conditions would you expect to see the market dominated by firms like Big Auto?

a. When the market demand curve intersects the quantity axis at fewer than 1,000 units.
b. When the market demand curve intersects the quantity axis at more than 1,000 units but fewer than 10,000 units.
c. When the market demand curve intersects the quantity axis at more than 10,000 units.

Transcribed Image Text:

Costs ATCLittle Auto ATCBig Auto 0 1,000 1,500 Quantity 5,000 10,000 (automobiles)