In a natural monopoly, the long-run average cost curve declines and therefore average cost is lower when there is only one seller.

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Quizplus · Accepted Answer

In a natural monopoly, the firm enjoys economies of scale which causes the long-run average cost curve to decline continuously as output increases. This means that the cost of producing and providing each unit of output decreases with increasing output. Thus, the average cost is lower when there is only one seller in the market.

In a Natural Monopoly, the Long-Run Average Cost Curve Declines