Figure 11-8 -Given the average cost curve shown in Figure 11-8 for dry cleaning, where Q₁ is the quantity demanded in a small town, and Q₂ for a larger town, you would expect dry cleaning to be a monopoly A)in a small town, but not a large one. B)in both large and small towns. C)in a large town, but not a small one. D)only if the process is patented.

Question

Quizplus · Accepted Answer

Based on the average cost curve shown in Figure 11-8, the cost of producing dry cleaning services is lower in a larger town (Q₂) than in a smaller town (Q₁). This suggests that there may be more competition in the larger town, making it less likely for a single firm to gain enough market power to become a monopoly. However, in the smaller town where the cost of production is higher, there may be fewer firms and less competition, making it more likely for a single firm to become a monopoly. Therefore, the answer is A. The process being patented is not sufficient information to determine whether dry cleaning would be a monopoly or not.

Figure 11-8 -Given the Average Cost Curve Shown in Figure 11-8 for Figure