Suppose that you build a high-speed,magnetically powered transportation system from New York to Los Angeles,and you are the only firm providing this service.High fixed costs resulting from the enormous quantity of capital used in this system enable decreasing average cost for any conceivable level of demand.Your monopoly is the result of your:
A)control of a scarce resource or input.
B)technological superiority.
C)increasing returns to scale.
D)use of government-set barriers.

Question

Quizplus · Accepted Answer

This scenario describes a situation of increasing returns to scale, where high fixed costs lead to decreasing average costs. This enables the monopolist to have a cost advantage over any potential competitors, making it difficult for new firms to enter the market and giving the monopolist control over the market. There is no mention of control over a scarce resource, technological superiority, or the use of government-set barriers in this scenario.

Suppose That You Build a High-Speed,magnetically Powered Transportation System from New