When a firm's LRAC curve is still declining when it intersects the market demand curve, we call the firm a(n)
A) perfect competitor.
B) monopolistic competitor.
C) oligopolist.
D) natural monopolist.

Question

Quizplus · Accepted Answer

When a firm's Long-Run Average Cost (LRAC) curve is still declining as it intersects the market demand curve, it indicates that the firm can produce at a lower average cost than any potential competitor, leading to a situation where a single firm (a monopoly) can supply the entire market at a lower cost than if there were multiple firms. This situation is referred to as a natural monopoly.

When a Firm's LRAC Curve Is Still Declining When It