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

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.

Quizplus · Accepted Answer

In a small town, the quantity demanded (Q₁) is lower, which may not support multiple firms due to higher average costs, leading to a monopoly. In a larger town, higher demand (Q₂) can support more firms, reducing the likelihood of a monopoly.

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