If firms' production functions are such as to achieve the lowest unit costs when each produces a substantial share of total market output,the industry is likely to exhibit the characteristics of

Question

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When firms' production functions are optimized by producing a substantial share of the total market output, it typically leads to a few firms dominating the market. This scenario is characteristic of an oligopoly, where a small number of firms have a large market share, leading to limited competition and the potential for collaborative behavior or strategic interactions among the firms.

If Firms' Production Functions Are Such as to Achieve the Lowest