A firm is best described as a natural monopoly if

Question

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A natural monopoly occurs when a single firm can supply the entire market at a lower cost than if multiple firms were operating in the market. This leads to the firm having a downward sloping average cost curve, which means that as production increases, the firm's average costs decrease. Therefore, the firm can supply the entire market while minimizing its average costs. Since there are no competing firms, the firm does not face any competition that would drive down its prices or force it to incur additional costs to compete.

A Firm Is Best Described as a Natural Monopoly If