One advantage of monopoly firms is that

Question

BlackTom AI · Accepted Answer

Average cost (AC) = FC/Q + AVC, so when a firm increases output Q it spreads fixed costs (FC) over more units and AC tends to fall. This cost property is the key reason monopoly firms can attain economies of scale.

1) Relevant concepts:
- Monopoly: a single seller facing the market demand curve and protected by barriers to entry.
- Economies of scale: a situation where long-run average cost falls as output increases.
- Natural monopoly: an industry where one firm can supply the entire market at lower cost than multiple firms because of large fixed costs and falling AC over the relevant demand range.

2) Step-by-step reasoning:
- Write average cost as AC = FC/Q + AVC. For positive fixed costs, the term FC/Q declines as Q increases, reducing AC.
- A monopoly, as the only firm in the market, can expand output to the market demand level. Because it supplies the whole market, it can operate at a larger scale than individual competitive firms.
- If the industry has large fixed costs and low marginal costs, increasing Q results in substantial AC declines. The monopoly can therefore achieve lower average costs per unit — economies of scale — relative to having many small competing firms.

3) Intermediate algebraic step:
- AC(Q) = FC/Q + AVC. d(AC)/dQ = -FC/Q^2 + d(AVC)/dQ. If AVC is roughly constant or increases slowly, the -FC/Q^2 term dominates for small Q, making d(AC)/dQ < 0 (AC falls with Q).

4) Why the correct answer is correct:
- Option b states that monopolies can grow large and achieve economies of scale. That follows directly from the AC expression and the monopoly’s single-firm market position allowing large-scale production.

5) Why other options are incorrect:
- a: Monopolies do not charge price = marginal cost; they set MR = MC and price > MC.
- c: Producing a homogeneous product characterizes perfect competition; monopolies often produce unique or differentiated goods.
- d: Monopolies charge higher prices and produce less output than perfectly competitive firms (not lower prices and more output).

Conclusion: The best choice is b. This matches the provided answer: b.

One advantage of monopoly firms is that单项选择题

类似问题

One advantage of monopoly firms is that

Which of the following is the best definition of economies of scale?

It is very expensive to build and run a national electricity network. One large firm can supply electricity at a lower cost than several small firms because it produces on a very large scale.What type of barrier to entry does this describe?

Which of the following is not a source of economies of scale?

Which of the following is the best definition of economies of scale?

One advantage of monopoly firms is that

Which of the following is the best definition of economies of scale?

Which of the following is not a source of economies of scale?

更多留学生实用工具

智能学习助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单