Natural monopolies enjoy strong economies of scale, and so as output increases:
A) marginal revenue is continually falling.
B) average costs are continually rising.
C) average costs are continually falling.
D) marginal costs are continually rising.

Question

Quizplus · Accepted Answer

Natural monopolies experience decreasing average costs as output increases due to economies of scale, meaning they can produce at a lower average cost with higher output.

Natural Monopolies Enjoy Strong Economies of Scale, and So as Output