Which of the following is true of a natural monopoly?
A) Economies of scale exist to only a very low level of output.
B) The firm is not protected by any barrier to entry.
C) Economies of scale allow one firm to supply the entire market at the lowest possible cost.
D) Its long- run average cost curve slopes upward as it intersects the demand curve.

Question

Quizplus · Accepted Answer

Natural monopolies occur where economies of scale are so pronounced that a single firm can supply the entire market at a lower cost than could multiple firms, making C the correct choice.

Which of the Following Is True of a Natural Monopoly