Which of the following conditions would be LEAST likely to lead to a monopolistic market structure?
A) possession of patent rights for basic production processes
B) control over the entire supply of a basic input
C) the need to be a price taker in order to sell in the market
D) significant economies of scale leading to declining average cost until the entire market demand is satisfied
E) exclusive rights to sell in a particular geographic market

Question

Quizplus · Accepted Answer

The need to be a price taker in order to sell in the market implies that firms have no control over the price, which means they are in a perfectly competitive market structure. Monopolistic market structures arise when firms have some degree of market power, which can come from factors such as possession of patent rights, control over a key input, or exclusive geographic rights. Significant economies of scale can also create monopolistic market structures as only a few firms can satisfy the entire market demand, but this is still more likely than a perfectly competitive market structure.

Which of the Following Conditions Would Be LEAST Likely to Lead