Suppose that you build a high-speed, magnetically powered transportation system from New York to Los Angeles.High fixed costs resulting from the enormous quantity of capital used in this system enable decreasing average cost for any conceivable level of demand.Your monopoly would result from:
A) sunk costs.
B) location.
C) economies of scale.
D) government restrictions.

Question

Quizplus · Accepted Answer

The high fixed costs and decreasing average costs indicate economies of scale. This would give the company a monopoly as it would be difficult for any potential competitors to match the economies of scale in the industry.

Suppose That You Build a High-Speed, Magnetically Powered Transportation System