Which of the following is true under natural monopoly?

Question

Quizplus · Accepted Answer

Economies of scale exist in a natural monopoly, which means that the average cost of production decreases as output increases. This is why a single firm can produce the entire market output at a lower cost than multiple firms competing in the market. The marginal cost curve may not be equal to the average cost curve, and the monopolist will not necessarily set price equal to marginal cost to earn economic profits. Output may not be produced under conditions of constant cost.

Which of the Following Is True Under Natural Monopoly