If left alone, a natural monopoly will
A) earn normal profits
B) earn maximum economic profits
C) produce where P = ATC
D) face competition from new entrants
E) go out of business

Question

Quizplus · Accepted Answer

A natural monopoly will earn maximum economic profits if left alone because its economies of scale allow it to produce at a lower cost than any potential competitors, effectively preventing new entrants from competing effectively.

If Left Alone, a Natural Monopoly Will