Suppose the Technology of an Industry Is Such That the Typical

question 119

Multiple Choice

Suppose the technology of an industry is such that the typical firm's minimum efficient scale is 8000 units per month at an average long-run cost of $5 per unit.If the total quantity demanded at a price of $5 per unit is 8500 units per month,the likely result would be

• A)a cartel.
• B)a concentrated oligopoly.
• C)a natural monopoly.
• D)price discrimination.
• E)perfectly competitive firms.

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Definitions:

Internal Rate

Often referred to as the Internal Rate of Return (IRR), it is the interest rate at which the net present value of all the cash flows (both positive and negative) from a project or investment equal zero.