If only one firm operates in a market,and a potential entrant is blockaded from entering the market,then the incumbent firm must
A) have acted to prevent entry.
B) be pricing where price equals marginal cost.
C) be a natural monopoly.
D) be the Stackelberg leader.

Question

Quizplus · Accepted Answer

A natural monopoly occurs when a single firm can supply the entire market at a lower cost than any combination of two or more firms, often due to high fixed costs and economies of scale. This can naturally block entry without any action from the incumbent.

If Only One Firm Operates in a Market,and a Potential