When Economies of Scale Exist So That One Firm Can

question 79

Multiple Choice

When economies of scale exist so that one firm can meet the entire market demand at a lower average total cost than two or more firms,

• A) a natural monopoly develops.
• B) the monopoly encounters competition.
• C) economic profit is reduced to zero.
• D) the monopoly converts all of the consumer surplus into economic profit.
• E) there is always the opportunity to price discriminate.

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