If a firm in an industry experiences very high fixed costs and ...

[@Brianna17]

If a firm in an industry experiences very high fixed costs and constant marginal cost, it is a good candidate for a natural monopoly.
 
  Indicate whether the statement is true or false

Question 2

Suppose there are 1000 identical wheat farmers. For each, TC = 10 + q2. Market demand is Q = 600,000  100p. Derive the short-run equilibrium Q, q, and p. Does the typical firm earn a short-run profit?
 
  What will be an ideal response?

[fauacakatahaias]

Answer to Question 1

True . Average cost will fall because average fixed costs decline and marginal cost stay constant. Two or more similar firms would have higher cost.

Answer to Question 2

The firm's supply is q = 0.5p; market supply is Q = 500p. Market equilibrium can be found as 500p = 600,000  100p, or 600p = 600,000, so p = 1,000 and Q = 500,000. q = 0.5p = 500.
Profit = (500  1,000 ) - (10 + 250,000 ) = 249,990. Each firm earns a profit.