Monopoly Market Structure Changes

Steps:

• Competitive markets have low barriers to entry, allowing many firms.
• Monopoly formation raises barriers like patents or regulations to block new entrants.
• The dominant firm expands output, gaining economies of scale through larger production.
• Firm size grows to serve the entire market without rivals.

Why D is correct:

• Monopolies feature high barriers to entry (definition: single seller protected from competition) and economies of scale (law: average costs fall with output), leading to larger firm size.

Why the others are wrong:

• A: Barriers and economies of scale increase, not decrease, in monopolies.
• B: Barriers increase and firm size grows, not the opposite.
• C: Economies of scale and firm size increase, not decrease.

Final answer: D