In the figure, D is the demand curve for taxi rides in a town, and ATC is the average total cost curve of a taxi company.
-In the scenario above, the market is
A) a natural duopoly.
B) a natural oligopoly with three firms.
C) a natural monopoly.
D) monopolistically competitive.

Question

In the figure, D is the demand curve for taxi rides in a town, and ATC is the average total cost curve of a taxi company.
-In the scenario above, the market is
A) a natural duopoly. 
B) a natural oligopoly with three firms. 
C) a natural monopoly. 
D) monopolistically competitive.

Quizplus · Accepted Answer

The market is a natural duopoly because there are only two firms in the market and they have similar cost structures.

In the Figure, D Is the Demand Curve for Taxi