Exhibit 10-10
-A firm that takes advantage of economies of scale and expands to become the only producer in the industry is called
A)a monopolistically-competitive firm.
B)an oligopoly.
C)a cartel.
D)a competitive firm.
E)a natural monopoly.

Question

Exhibit 10-10 
-A firm that takes advantage of economies of scale and expands to become the only producer in the industry is called
A)a monopolistically-competitive firm. 
B)an oligopoly. 
C)a cartel. 
D)a competitive firm. 
E)a natural monopoly.

Quizplus · Accepted Answer

A firm that takes advantage of economies of scale and expands to become the only producer in the industry is called a natural monopoly. This is because the expansion allows the firm to produce at a lower cost than any smaller competitor, creating a barrier to entry for potential competitors. This results in the firm being the only producer and hence, a monopoly.

Exhibit 10-10 -A Firm That Takes Advantage of Economies of Scale and of Scale