Monopoly market structures may lead to lower prices than competitive markets in the presence of
A) price discrimination
B) laissez-faire
C) contestable markets
D) substantial economies of scale
E) countervailing power

Question

Quizplus · Accepted Answer

Monopoly market structures may lead to lower prices than competitive markets in the presence of substantial economies of scale. Economies of scale occur when the average cost of production decreases as the quantity of output increases. This means that a monopoly can produce goods or services at a lower cost than a competitive firm, and can therefore sell them at a lower price.

Monopoly Market Structures May Lead to Lower Prices Than Competitive