Which of the following average cost functions suggests the presence of a natural monopoly?
A) AC = 2
B) AC = 100/Q + 2
C) TC = 100/Q + 2Q
D) All of the above.

Question

Quizplus · Accepted Answer

A natural monopoly occurs when average costs decrease as output increases, which is represented by the average cost function AC = 100/Q + 2, where AC decreases as Q (quantity) increases.

Which of the Following Average Cost Functions Suggests the Presence