Which of the following is true of a natural monopoly?
A)The operation of more than one firm reduces the production efficiency of the market.
B)The good that is sold by a natural monopoly is easily substitutable.
C)The firm produces at the point where marginal revenue equals price.
D)The natural monopoly market has no barriers to entry and exit.

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 two or more firms, leading to economies of scale. This makes it inefficient for multiple firms to operate in the market, as it would increase the overall cost of production.

Which of the Following Is True of a Natural Monopoly