A firm that emerges as the only seller in an industry with economies of scale is called a(n)
A) monopoly.
B) oligopoly.
C) monopsony.
D) natural oligopoly.
E) natural monopoly.

Question

Quizplus · Accepted Answer

A firm that emerges as the only seller in an industry with economies of scale is called a natural monopoly. This is because the firm has a cost advantage over any potential competitors due to its ability to spread its fixed costs over a larger output, making it difficult for new firms to enter the market.

A Firm That Emerges as the Only Seller in an Industry