Suppose that you build a high-speed, magnetically powered transportation system from New York to Los Angeles.High fixed costs resulting from the enormous quantity of capital used in this system enable decreasing average cost for any conceivable level of demand.Your monopoly would result from:
A)control of a scarce resource or input.
B)technological superiority.
C)increasing returns to scale.
D)government-created barriers.

Question

Quizplus · Accepted Answer

The decreasing average cost for any conceivable level of demand suggests that there are increasing returns to scale, which is a characteristic of monopoly power. This means that as output increases, average costs decrease, making it difficult for competitors to enter the market and compete on price.

Suppose That You Build a High-Speed, Magnetically Powered Transportation System