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

Question

Quizplus · Accepted Answer

A natural monopoly occurs when economies of scale are so significant that a single firm can supply the entire market at a lower cost than any combination of multiple firms, making it most efficient for one firm to dominate the market.

Which of the Following Is TRUE of a Natural Monopoly