One explanation for why oligopolies exist is that
A)it is easier to regulate a smaller number of firms
B)minimum efficient scale is small relative to the market,allowing a large number of firms to achieve minimum long-run average total cost
C)minimum efficient scale is large relative to the market,allowing only a few firms to achieve minimum long-run average total cost
D)minimum efficient scale may be greater than the market quantity demanded at the price equal to minimum long-run average total cost
E)competitive pricing drives firms from the market

Question

Quizplus · Accepted Answer

Oligopolies exist when minimum efficient scale (MES) is large relative to the market. This implies that only a few large firms can achieve MES and compete effectively in the market. This is because the high fixed costs associated with production make it difficult for small firms to compete with larger firms that benefit from economies of scale. As a result, oligopolies often emerge in industries with high barriers to entry and high fixed costs.

One Explanation for Why Oligopolies Exist Is That