Suppose the technology of an industry is such that the typical firm's minimum efficient scale is 8000 units per month at an average long- run cost of $5 per unit. If the total quantity demanded at a price of $5 per unit is 8500 units per month, the likely result would be

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Quizplus · Accepted Answer

The minimum efficient scale is close to the total market demand, suggesting that one firm can supply the entire market at the lowest cost, leading to a natural monopoly.

Suppose the Technology of an Industry Is Such That the Typical