When long-run average cost falls over such a great range of output that it reaches a minimum at a greater output than consumers demand, we call a firm in such a market a natural
A)monopoly.
B)competitor.
C)oligopoly.
D)monopsony.
E)industry.

Question

Quizplus · Accepted Answer

When a firm's long-run average cost falls over a large range of output and reaches a minimum at a point where consumers demand less than that quantity of output, it implies that the market demand can be satisfied by a single firm at a lower cost than two or more similar firms producing at smaller scales. This situation is known as a natural monopoly. Therefore, the best choice is A, natural monopoly.

When Long-Run Average Cost Falls Over Such a Great Range