A firm that confronts economies of scale:
A) at lower levels of output and then encounters diseconomies of scale at higher levels of output is a natural monopoly.
B) over the entire range of outputs demanded is called a natural monopoly.
C) at any particular level of output is called a natural monopoly.
D) has a continually rising long-run average cost curve.

Question

Quizplus · Accepted Answer

A natural monopoly occurs when a firm experiences economies of scale over the entire range of outputs demanded, allowing it to supply the entire market at a lower cost than any combination of multiple firms.

A Firm That Confronts Economies of Scale