Which of the following is a characteristic of a natural monopoly?
A)Fixed costs are typically a small portion of total costs.
B)Average total cost declines over large regions of output.
C)The product sold is a natural resource such as diamonds or water.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

A characteristic of a natural monopoly is that average total cost declines over large regions of output. This is because natural monopolies have high fixed costs but low variable costs, and can achieve economies of scale as they produce more output. Choices A and C are not necessarily true characteristics of natural monopolies.

Which of the Following Is a Characteristic of a Natural