In the presence of large sunk costs,which of the following market structures generally leads to the highest price?
A) Stackelberg
B) Cournot
C) Bertrand
D) Monopoly

Question

Quizplus · Accepted Answer

In a monopoly, there is only one seller with complete control over the market. This allows the seller to charge the highest possible price without fear of competition driving prices down. Large sunk costs create a barrier to entry for potential competitors, which increases the power of the monopoly seller. Therefore, a monopoly is likely to result in the highest price when there are large sunk costs.

In the Presence of Large Sunk Costs,which of the Following