Asked by
jalen sheppard
on Nov 05, 2024
Verified
Refer to Figure 13.8. The long-run average cost curve is for the only firm producing electricity, and the market demand for electricity from all buyers is 100,000 kilowatts per hour. Due to economies of scale
A) it makes economic sense for this firm to be the only producer of electricity.
B) many firms should be in this industry.
C) this firm should not be allowed to provide electricity.
D) the government should take over the electricity market.
Economies Of Scale
Cost advantages reaped by companies when production becomes efficient, as the scale of operation increases leading to a reduction in average costs.
Long-Run Average Cost
The average cost per unit of output when all inputs, including capital, are variable and optimized.
- Perceive the correlation between economies of scale and the development of natural monopolies.
Verified Answer
FM
Learning Objectives
- Perceive the correlation between economies of scale and the development of natural monopolies.