A monopoly is most likely to emerge and be sustained when
A)output demand is relatively elastic.
B)firms have U-shaped average-total-cost curves.
C)fixed capital costs are small relative to total costs.
D)economies of scale are large relative to market demand.

Question

Quizplus · Accepted Answer

Economies of scale being large relative to market demand means that a single firm can produce the total output demanded in the market at a lower cost per unit than could multiple firms. This creates a barrier to entry, making a monopoly more likely to emerge and be sustained.

A Monopoly Is Most Likely to Emerge and Be Sustained