Under what conditions can a monopolist have potentially lower costs and possibly charge a lower price than would exist if the market were competitive?
A) when the monopolist operates on the inelastic portion of the demand curve
B) when the monopolist is a profit maximizer rather than a revenue maximizer
C) when substantial diseconomies of scale are present
D) when substantial economies of scale are present

Question

Quizplus · Accepted Answer

When substantial economies of scale are present, a monopolist can produce at a lower average cost due to the large scale of production, potentially allowing them to charge lower prices than in a competitive market.

Under What Conditions Can a Monopolist Have Potentially Lower Costs