A natural monopoly is defined as an industry in which one firm
A) can produce the entire industry output at a lower average cost than a larger number of firms could.
B) can produce the entire industry output at a lower marginal cost than a larger number of firms could.
C) is very large relative to other firms that could enter the industry.
D) can earn higher profits if it is the only firm in the industry rather than if other firms also enter the industry.

Question

Quizplus · Accepted Answer

A natural monopoly occurs when a single firm can supply the entire market demand at a lower average cost than multiple firms, due to economies of scale.

A Natural Monopoly Is Defined as an Industry in Which