For a firm to be a natural monopoly, economies of scale must be realised at a scale that is close to total demand in the market.

Question

Quizplus · Accepted Answer

A natural monopoly occurs when a single firm can supply a good or service to an entire market at a lower cost than what it would be if there were multiple firms, due to economies of scale being realized at a level of output that meets or exceeds the total demand in the market.

For a Firm to Be a Natural Monopoly, Economies of Scale