If firms in a market have been prohibited from reaching the minimum efficient scale,
A)the market is probably perfectly competitive.
B)the market is probably a monopoly.
C)mergers will result if the restrictions are eliminated.
D)the LRATC curve has been shifting upward.
E)the LRATC curve has been shifting downward.

Question

Quizplus · Accepted Answer

If firms are prohibited from reaching the minimum efficient scale, they are operating at higher costs. Eliminating restrictions would allow firms to merge and achieve economies of scale, reducing costs.

If Firms in a Market Have Been Prohibited from Reaching