For a typical natural monopoly, average total cost is
A)falling, and marginal cost is above average total cost.
B)falling, and marginal cost is below average total cost.
C)rising, and marginal cost is below average total cost.
D)rising, and marginal cost is above average total cost.

Question

Quizplus · Accepted Answer

In a natural monopoly, average total cost is falling due to economies of scale, and marginal cost is below average total cost because the cost of producing an additional unit is less than the average cost of production.

For a Typical Natural Monopoly, Average Total Cost Is