Figure 15-1

-Refer to Figure 15-1.The shape of the average-total-cost curve reveals information about the nature of the barrier to entry that might exist in a monopoly market.Which monopoly type best coincides with the figure
A)a resource monopoly
B)a natural monopoly
C)a government-created monopoly
D)a dynamic monopoly

Question

Figure 15-1
 
-Refer to Figure 15-1.The shape of the average-total-cost curve reveals information about the nature of the barrier to entry that might exist in a monopoly market.Which monopoly type best coincides with the figure
A)a resource monopoly 
B)a natural monopoly 
C)a government-created monopoly 
D)a dynamic monopoly

Quizplus · Accepted Answer

The shape of the average-total-cost curve in this figure indicates that there are economies of scale, which means that the average cost of production decreases as output increases. This is a characteristic of a natural monopoly, where the market demand can be met by a single firm at the lowest possible cost due to economies of scale. In contrast, a resource monopoly typically involves exclusive ownership of a necessary input, a government-created monopoly arises due to government intervention, and a dynamic monopoly arises due to innovation and technological advantage, none of which are evident in this figure.

Figure 15-1 -Refer to Figure 15-1.The Shape of the Average-Total-Cost Curve Reveals