A natural monopoly
A) arises as a result of legal barriers to entry.
B) occurs when one firm controls a natural resource.
C) arises when one firm can meet the entire market demand at a lower average total cost than two or more firms.
D) Both answers A and B are correct.
E) Both answers A and C are correct.

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 could two or more firms, due to economies of scale. This is not necessarily related to legal barriers or control over natural resources.

A Natural Monopoly