Large minimum efficient scale of plant combined with limited market demand may lead to
A) natural monopoly.
B) patent monopoly.
C) government franchise monopoly.
D) shared monopoly.

Question

Quizplus · Accepted Answer

A large minimum efficient scale of plant combined with limited market demand may result in a natural monopoly where the fixed costs of production are so high that it is not feasible for more than one firm to operate at a profit. The single firm then has a monopoly over the market.

Large Minimum Efficient Scale of Plant Combined with Limited Market