For a firm to be a natural monopoly,it should have
A)a special patent.
B)exclusive access to a copyright.
C)a cost curve that was continuously downward sloping to the right.
D)a monopoly on a natural resource.
E)a product so unique that no other firm could come close to producing it.

Question

Quizplus · Accepted Answer

A natural monopoly is a market situation in which the economies of scale are so strong that a single firm can produce the entire output of the market at a lower cost than any potential competitor. This is usually seen in industries with high fixed costs and low marginal costs, such as utilities like water or electricity. The cost curve continuously sloping downward to the right indicates increasing returns to scale, and thus, lower average costs as the firm expands production.

For a Firm to Be a Natural Monopoly,it Should Have