A firm, judged to be a natural monopoly in a small rural market like Centerville, may be considered monopolistically competitive in a market such as New York City.

Question

Quizplus · Accepted Answer

A firm may be a natural monopoly in a small market due to high fixed costs and economies of scale making it inefficient for multiple firms to operate. However, in a larger market like New York City, the increased demand and potential for more competitors can change the market structure, making it possible for the firm to operate in a monopolistically competitive environment.

A Firm, Judged to Be a Natural Monopoly in a Small