A natural monopoly occurs because of

Question

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Natural monopolies occur when there are significant economies of scale, meaning that the cost of producing each additional unit decreases as output increases. In such a situation, a single firm can produce at a lower cost than multiple smaller firms. As a result, it may not be feasible or economically efficient to have multiple firms competing in the market. Legal restrictions on entry (A) and low fixed costs (B) are not necessarily factors in the creation of a natural monopoly. High marginal costs (D) would actually make it more difficult for a firm to maintain a monopoly position, as it would have to charge a higher price to cover those costs, making it more vulnerable to potential competition.

A Natural Monopoly Occurs Because of