If average total cost per unit is minimized when a single producer supplies the entire market,this indicates
A)the presence of limit pricing
B)that the single producer is a perfect monopoly
C)the presence of substantial economies of scale
D)that the market has been narrowly defined
E)the existence of a single-price monopoly

Question

Quizplus · Accepted Answer

This indicates the presence of substantial economies of scale since the average total cost per unit is minimized when there is only one producer, implying that the fixed costs are spread over a larger level of output. This is due to economies of scale - the greater the quantity produced, the lower the per-unit costs.

If Average Total Cost Per Unit Is Minimized When a Single