Which of the following correctly defines a monopoly that arises from economies of scale?
A) a single firm operating in a market
B) a single firm that can supply the market at a lower cost than two or more firms
C) a single firm that controls the production of a natural resource
D) a single firm that produces the efficient and socially optimal quantity in a market

Question

Quizplus · Accepted Answer

A monopoly that arises from economies of scale occurs when a single firm can supply the entire market at a lower cost than if two or more firms were to compete. This is because the firm enjoys economies of scale, which are cost advantages that arise as production levels increase. As a result, it becomes difficult for other firms to enter the market and compete with the monopolist on price, leading to a single firm dominating the market.

Which of the Following Correctly Defines a Monopoly That Arises