Suppose a firm is a natural monopoly. Then, until the long-run average cost curve crosses the demand curve, as the quantity increases the long-run average costs
A) increase.
B) decrease.
C) decrease and then increase.
D) increase and then decrease.

Question

Quizplus · Accepted Answer

In a natural monopoly, the long-run average cost curve is downward sloping over the range of output that meets market demand, indicating that average costs decrease as quantity increases.

Suppose a Firm Is a Natural Monopoly