Teacher:You are given a background paragraph that describes one or more causal or qualitative relationships such as a relationship in economics or a scientific law and a story that makes use of the concepts or the relationship described in the provided paragraph. You are also given a question about the story that requires an understanding of the relationship described in the background paragraph and the story. You need to come up with an answer to the given question; the answer will be a span from either the question or the story. In order to correctly answer the given question, you need to understand the relationship mentioned in the background paragraph and should be able to use it to understand that in the story. Your answer can not consist of any word that is not mentioned in any of these: the background paragraph, the story, or the question. You can directly copy and paste a span from the story or the question while answering the given question.
Teacher: Now, understand the problem? Solve this instance: Background Paragraph: A firm with high fixed costs requires a large number of customers in order to have a meaningful return on investment. This is where economies of scale become important. Since each firm has large initial costs, as the firm gains market share and increases its output the fixed cost (what they initially invested) is divided among a larger number of customers. Therefore, in industries with large initial investment requirements, average total cost declines as output increases over a much larger range of output levels.
Story: City D's mayor wants to invite more businesses in the city. Three firms, firm A, firm B, and firm C, took advantage of this opportunity. Firm A does not require large initial costs, but firm B and firm C require
large initial costs. Firm B managed to increase its market share, but firm C failed to increase its market share.
Question: Which firm would most likely not be able to achieve economies of scale, firm A or firm B?
Student:
firm A.