When demand and cost conditions are such that only one firm can exist in an industry:

Question

Quizplus · Accepted Answer

When demand and cost conditions are such that only one firm can exist in an industry, a natural monopoly is said to exist. This is because the economies of scale, such as lower production costs, make it difficult for new firms to enter the market and compete. In such a scenario, government intervention may be required to prevent the monopolistic firm from exploiting consumers. Splitting the firm into smaller units may not necessarily result in greater efficiency or cost savings.

When Demand and Cost Conditions Are Such That Only One