In a natural monopoly, throughout the range of market demand
A)marginal cost is above average total cost and pulls average total cost upward.
B)average total cost is above marginal cost and pulls marginal cost upward.
C)marginal cost is below average total cost and pulls average total cost downward.
D)there are diseconomies of scale.

Question

Quizplus · Accepted Answer

In a natural monopoly, average total cost is above marginal cost, and as production increases, the average total cost decreases due to economies of scale, meaning marginal cost pulls average total cost downward.

In a Natural Monopoly, Throughout the Range of Market Demand