A distinguishing characteristic of a natural monopoly is that
A) the government restricts the number of firms to one for the industry
B) the ATC curve is downward sloping over the entire production range
C) the TC curve is downward sloping over the entire production range
D) its demand curve is horizontal
E) the industry's demand curve is also the firm's demand curve

Question

Quizplus · Accepted Answer

A natural monopoly is characterized by economies of scale over the entire range of production, which means that average total cost (ATC) decreases as output increases. This makes it more efficient for a single firm to serve the entire market.

A Distinguishing Characteristic of a Natural Monopoly Is That