where minimum efficient scale is very huge for


Where minimum efficient scale is very huge for capital intensive operations, it may be more cost effective to allow one company to spread its fixed costs over a very huge number of consumers, rather than have various competing firms suffer the fixed costs of a minimum efficient scale and have to share a customer base.   There are various industries that are very capital intensive and need large initial investments to operate.  These types of firms are frequently natural monopolies.  Railroads, electric generating companies, and air lines needs tens of millions of dollars in fixed costs.

 

Request for Solution File

Ask an Expert for Answer!!
Microeconomics: where minimum efficient scale is very huge for
Reference No:- TGS0266174

Expected delivery within 24 Hours