One reason why a monopolist might be able to provide greater output at lower costs than other market structures is that some monopolists
A) earn exceptional profit which allows them to lower price and costs
B) produce high volume output which allows them to capture economies of scale so that their ATCs are lower
C) have high market share which allows them to raise price and lower cost at the same time
D) exploit their labor force by offering low wage rates so that costs are lower
E) do not advertise, thereby reducing costs

Question

Quizplus · Accepted Answer

Monopolists can produce high volume output, which allows them to capture economies of scale. This means they can spread their fixed costs over a larger number of units, reducing the average total cost (ATC) per unit. This efficiency is not necessarily related to profit levels, market share manipulation, labor exploitation, or advertising practices directly, but rather to the scale of production.

One Reason Why a Monopolist Might Be Able to Provide