Please answer this question. Thank you! The figure to the right shows curves rep
ID: 1137924 • Letter: P
Question
Please answer this question. Thank you!
The figure to the right shows curves representing the average cost of golf clubs produced in Scotland (ACs) and Malaysia (ACM) as well as the world demand (D) for golf clubs. 18 External Economies and Specialization Price, Cost (per club) It is assumed that the world demand for clubs can be satisfied entirely by either country According to this figure, economic efficiency considerations would ideally have golf club production located in OA Malaysia OB Scotland. O both countries to prevent national monopolies. Ou None of the above ACS ACM Suppose, however, that golf club production is first established in Scotland, where the game of golf is said to have originated. In this case Scotland's producers will effectively block the entry of new Malaysian producers because Quantity of clubs OA their vast experience makes their clubs better O their prevailing price is below the average cost for a Malaysian start-up O they wil own critical patents O to buyers, tradition matters more than cost. firm.Explanation / Answer
18) The correct answer is C) because if only one country is allowed to produce then they will charge high prices. But all/owing both can lead to increased consumer surplus as Malaysian firm can sell at lower prices.
19) The correct option is A because this leads to product differentiation where Scotland products will be considered superior