Which of the following is an example of a natural monopoly?
A) a firm whose good has only one close substitute
B) a firm whose average total cost falls as output increases
C) a firm whose sales exceed the total of its competition
D) a firm that owns all of the raw materials it uses
E) a firm granted exclusive producing and marketing rights by the government

Question

Quizplus · Accepted Answer

A natural monopoly occurs when a firm experiences decreasing average total costs over a range of outputs, typically due to high fixed costs and economies of scale, making it more efficient for a single firm to serve the entire market.

Which of the Following Is an Example of a Natural