Final answer:
The question relates to the Business subject and addresses the concept of average cost/unit in production economics, specifically focusing on economies of scale, cost-profit comparisons, and the impact of international trade on small economies.
Step-by-step explanation:
The question is examining the concept of average cost/unit and its variation with the number of units produced, which is a key aspect of microeconomics within the field Business. When studying average costs, it is important to understand that average total cost is calculated by dividing the total cost by the total output at different production levels. A U-shaped curve is often observed on a graph, reflecting economies of scale and the relationship between production volume and unit costs. Moreover, comparing the firm's average cost of production to the market price is essential for determining profitability. If the average cost is lower, the firm can potentially earn profits. Additionally, this analysis helps in making production decisions, such as whether to increase, decrease, or maintain the current level of production based on marginal costs and market prices.
International trade plays a critical role in enabling even small economies to achieve economies of scale. By allowing access to larger markets, firms can produce greater quantities, thus lowering the average cost per unit and benefiting from the enhanced competition and variety that results from various producers on a global scale.