Final Answer:
An industry in which advantages of large scale production make it possible for a single firm to produce the entire output of the market at a lower average cost than a larger number of firms each producing a smaller quantity is Monopoly. so the correct option is 1) Monopoly.
Step-by-step explanation:
A monopoly is an industry structure where a single firm dominates the entire market and is the sole producer of a particular product or service. In this scenario, the advantages of large-scale production allow the monopoly to achieve lower average costs compared to a situation where multiple smaller firms produce the same quantity individually.
In a monopoly, there is no competition, and the monopolist has the power to set prices and control the supply of the product. The absence of competitors eliminates the need for price wars or cost-cutting measures associated with competitive markets.
The key characteristic of a monopoly is the ability to benefit from economies of scale, which means that as the scale of production increases, the average cost of production decreases. This is advantageous for a single firm that can produce the entire market output efficiently and economically.
In contrast, in perfect competition, oligopoly, and monopolistic competition, there are multiple firms in the market, and the advantages of large-scale production may not lead to the same cost efficiencies as in a monopoly.