A natural monopoly:
A) has an average total cost curve that reaches minimum at a low level of output.
B) is usually subject to antitrust suits.
C) is usually allowed to choose its price so as to maximize profits in the United States.
D) occurs when a single firm can supply the entire market demand for a product at a lower average total cost than would be possible if two or more firms supplied the market.

Question

Quizplus · Accepted Answer

A natural monopoly occurs when a single firm can supply the entire market demand at a lower average total cost than multiple firms, due to economies of scale.

A Natural Monopoly