A natural monopoly exists when
A) a firm produces a product essential to national security.
B) a firm is able to operate at the minimum point of its long- run average total cost curve.
C) one firm can most efficiently supply the entire market demand.
D) a firm has a government charter to be the sole producer of some good.
E) only one firm is supplying a natural resource.

Question

Quizplus · Accepted Answer

A natural monopoly occurs when a single firm can supply the entire market demand more efficiently than multiple firms due to economies of scale, leading to lower costs per unit as production increases.

A Natural Monopoly Exists When