Consider an unregulated monopoly in Figure 13.2. Suppose that a second firm enters the market. As a result, the demand curve facing each firm lies entirely below the long-run average cost curve. Because having two firms in the industry makes both firms unprofitable, then the industry is classified as:
A. a natural monopoly.
B. a duopoly.
C. a monopolistic competitor.
D. a pure competitor.
Answer: A
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