The average cost curve of a natural monopoly
A)is upward-sloping.
B)is downward-sloping.
C)is horizontal.
D)has an inverted U-shape.
E)is vertical.

Question

Quizplus · Accepted Answer

Natural monopolies typically have high fixed costs and low variable costs, leading to economies of scale. This means as they produce more, the average cost of production decreases, resulting in a downward-sloping average cost curve.

The Average Cost Curve of a Natural Monopoly