All natural monopolies are characterized by
A) decreasing marginal cost at the point where their marginal cost curve crosses their demand curve.
B) the fact that they earn economic losses.
C) decreasing average costs at the point where their average cost curve crosses their demand curve.
D) the fact that losses can only be avoided if they are regulated.

Question

Quizplus · Accepted Answer

All natural monopolies have decreasing average costs at the point where their average cost curve crosses their demand curve. This occurs because natural monopolies have high fixed costs and low variable costs, causing the average cost to decrease as output increases. The other options are not true characteristics of natural monopolies.

All Natural Monopolies Are Characterized by