When a monopoly exploits economies of scale, its marginal cost curve shifts to the left.

Question

Quizplus · Accepted Answer

Economies of scale lead to a reduction in average costs over time as production increases, not a shift in the marginal cost curve. The marginal cost curve could potentially slope downward for a range of output due to economies of scale, but it doesn't shift left or right; those shifts are typically associated with changes in variable input costs or technological improvements.

When a Monopoly Exploits Economies of Scale, Its Marginal Cost