In the electric guitar market, the quantity demanded is significantly greater than the quantity found at the bottom of the LRAC. Given this information, which of the following will likely occur?

a. Multiple firms will compete in the electric guitar market.
b. One firm will manufacture and sell electric guitars.
c. Most electric guitar firms will experience diseconomies of scale.
d. A monopoly will form in the electric guitar industry.


a. Multiple firms will compete in the electric guitar market.

If the quantity demanded in the market of a certain product is much greater than the quantity found at the bottom of the long-run average cost curve, where the cost of production is lowest, the market will have many firms competing.

Economics

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Economics