If a natural monopoly charged the competitive price,it would earn a negative profit.

Question

Quizplus · Accepted Answer

A natural monopoly has a very high barrier to entry, which means that it faces no competition in the market. This enables it to set a higher price and earn monopoly profits. However, if it were to charge the competitive price, it would have to lower its price to the point where it earns a normal profit, which may not be enough to cover its fixed costs. In this case, it would earn a negative profit.

If a Natural Monopoly Charged the Competitive Price,it Would Earn