What is a major characteristic of a natural monopoly?
A) The firm is a single seller of a resource.
B) The firm sets price equal to marginal revenue.
C) There is extensive product advertising.
D) There is a large range of output to which economies of scale apply.
E) There are major legal restraints preventing other firms from entering the market.

Question

Quizplus · Accepted Answer

A natural monopoly occurs when a single firm can supply the entire market at a lower cost than any combination of two or more firms, due to economies of scale over a large range of output.

What Is a Major Characteristic of a Natural Monopoly