Under what conditions might a monopoly be more efficient than a perfectly competitive firm?

What will be an ideal response?


When there is a natural monopoly, one firm takes advantage of economies of scale that cannot be fully exploited by a smaller firm, thus producing at a lower ATC (and perhaps selling at a lower price). Often, however, regulation is necessary to compel a natural monopoly to produce near the efficient level of output.

Economics

You might also like to view...

Which of the following are examples of involuntary risks?

a. skydiving d. (b) and (c) only b. mountain climbing e. none of the above c. being exposed to secondhand smoke

Economics

Frank is given the choice between pizza and hotdogs and chooses pizza. Then, before serving him, his host tells Franks he could have a hamburger. Frank says he wants a hot dog. Which of the properties of Arrow's impossibility theorem does Frank violate?

Economics

The number of labor union members reached its peak in the decade of the

A. 1950s. B. 1960s. C. 1970s. D. 1980s.

Economics

If exports of goods and services are $450 billion, imports of goods and services are $350 billion, unilateral transfers made by U.S. citizens to foreigners are $5 billion, and unilateral transfers made by foreigners to U.S. citizens are $4 billion, then the current account balance will be __________ billion.

A. +$101 B. -$101 C. -$99 D. +$91 E. +$99

Economics