A firm that has economies of scale:
A)at lower levels of output and then encounters diseconomies of scale at higher levels of output is a natural monopoly.
B)over the entire range of output demanded is called a natural monopoly.
C)at any particular level of output is called a natural monopoly.
D)has a continually rising long-run average cost curve.

Question

Quizplus · Accepted Answer

A firm that has economies of scale over the entire range of output demanded is called a natural monopoly. This means that as the firm increases its output, its average cost per unit decreases, allowing it to produce at a lower cost than smaller firms. As a result, it can dominate the market and potentially prevent entry by other firms.

A Firm That Has Economies of Scale