Answer: The correct option is:
b) Experience economies of scale
Explanation:
The characteristics you listed align with a monopoly market structure. Let's break down each option:
a) Face intense competition - This is incorrect. Monopolies, by definition, lack competition because they are the sole provider of a particular product or service in the market. Therefore, they do not face intense competition.
b) Experience economies of scale - This is correct. Monopolies often experience economies of scale due to their large size and control over the entire market. This allows them to produce goods or services at a lower average cost per unit as they increase their level of output.
c) Have no barriers to entry - This is incorrect. Monopolies typically have significant barriers to entry, which prevent other firms from entering the market and competing with them. Barriers to entry can include factors such as patents, high start-up costs, control over essential resources, and legal restrictions.
d) Achieve allocative efficiency - This is incorrect. Monopolies are not usually allocatively efficient because they produce where marginal cost (MC) equals marginal revenue (MR), rather than where MC equals price (P), which is the condition for allocative efficiency. In a monopoly, P > MC, resulting in underproduction and a deadweight loss of consumer surplus.
