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Author Question: If the average cost curve for an individual firm is decreasing when it intersects the market demand ... (Read 10 times)

tfester

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on: Jul 1, 2018
If the average cost curve for an individual firm is decreasing when it intersects the market demand curve, why is a natural monopoly likely to develop in this market? Explain.
 
  What will be an ideal response?

Question 2

The forecasting method that involves using an average of past observations to predict the future (if the forecaster feels that the future is a reflection of some average of past results) is the
 
  A) moving average method.
  B) econometric forecasting method.
  C) exponential smoothing method.
  D) Both A and B
  E) Both A and C


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BUTTHOL369

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Reply #1 on: Jul 1, 2018
Answer to Question 1

Perfect competition leads to firms increasing size until reaching the minimum of the AC curve. If firms naturally did so, before reaching this size, a single firm would be left in the market. That firm will no longer need to act as a price-taker as its size gives it cost advantages over potential entrants.

Answer to Question 2

E


tfester

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Reply 2 on: Jul 1, 2018
Great answer, keep it coming :)

peter

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Reply 3 on: Yesterday
Gracias!

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