Industries with large fixed cost and small,constant marginal cost will,over time,
A) have more and more small firms.
B) see one firm,or a few large firms,emerge.
C) see no change in the average size of firms.
D) see no change in the average number of firms.
E) see the size of their market decline.

Question

Quizplus · Accepted Answer

Industries with large fixed costs and small constant marginal costs are likely to experience economies of scale, which means that a larger firm can produce more efficiently and at lower cost per unit than a smaller firm. Over time, as the industry develops, it is likely that one or a few large firms will emerge and dominate the market. This is known as a natural monopoly.

Industries with Large Fixed Cost and Small,constant Marginal Cost Will,over