A natural monopoly
A) is not protected by any barrier to entry.
B) exists because of legal barriers to entry.
C) is an industry where two or more smaller firms can supply the market at a lower cost than one big firm could.
D) is an industry in which economies of scale exist at the level of output where the market demand curve intersects the long- run average cost curve.

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 could two or more firms, primarily due to economies of scale. This is often seen in industries where the initial investment and fixed costs are so high that one firm can serve the entire market more efficiently than multiple competitors.

A Natural Monopoly