Question

Suppose that total demand for refrigerators at the market price is 15,000 units. If the LRAC curve reaches a clear minimum average cost at 5,000 units, then the industry structure must be

Answer 1

The industry structure must be a monopoly. A perfectly competitive and monopolistic company earns 0 profit in case of the long run.

What do you mean by Monopoly market?

Monopoly, as described by Irving Fisher monopoly., is a “non-competitive” market, which creates a situation where a person or business is the sole supplier of something.

To increase profits the company produces that number MR = MC. Build a completely competitive company P = MR.

Therefore, If the LRAC curve reaches a clear minimum average cost at 5,000 units, then the industry structure must be a monopoly. This is the correct answer.

Learn more about Monolpoly market refer:

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