Q6. Explain in your own words why the following LRAC curve could only have one producer in a market if market demand were less than 10,000 units. (Imagine if demand were 9,000 units. What would the cost be for a second firm trying to enter the market? Could it compete? What would its costs be in relation to the established firm?) What is the economic term for this type of market? Alternatively, consider a situation, again in the setting of Exhibit 9-9a, where the bottom of the long-run average cost curve is 10,000, but total demand for the product is only 5,000. (For simplicity, imagine that this demand is highly inelastic, so that it does not vary according to price.) In this situation, the market may well end up with a single firm-a monopoly-producing all 5,000 units. If any firm tried to challenge this monopoly while producing a quantity lower than 5,000 units, the prospective competitor firm would have a higher average cost, and so it wouldn't be able to compete in the longer term without losing money. A firm producing 10,000 units could produce at a lower average cost-but it could only sell 5,000 units, and so it would lose money as well. Chapter 11 discusses the situation of a monopoly firm that finds itself in this situation. Dollars ($) R 500 5,000 10,000 15,000 20,000 Output (a) LRAC curve with a clear minimum point