-We know that the firm shown in the figure above is a natural monopoly because as output increases, the
A) marginal cost is constant.
B) demand curve slopes downward.
C) marginal revenue curve lies below its demand curve.
D) average total cost decreases so that the firm can supply the market at lower cost than two firms.

Question

-We know that the firm shown in the figure above is a natural monopoly because as output increases, the
A) marginal cost is constant. 
B) demand curve slopes downward. 
C) marginal revenue curve lies below its demand curve. 
D) average total cost decreases so that the firm can supply the market at lower cost than two firms.

Quizplus · Accepted Answer

A natural monopoly occurs when a single firm can supply the entire market at a lower cost than multiple firms, typically due to decreasing average total costs over a range of output.

-We Know That the Firm Shown in the Figure Above