With a natural monopoly, the potentially insurmountable barrier to entry is the
A)increasing average costs.
B)the absence of fixed costs.
C)decreasing average total costs.
D)low profit margins.

Question

Quizplus · Accepted Answer

In a natural monopoly, the barrier to entry is often due to decreasing average total costs over a wide range of production. This means that as the company produces more, the cost per unit decreases, allowing the monopoly to provide the service or product at a lower price than any new entrants could, effectively deterring competition.

With a Natural Monopoly, the Potentially Insurmountable Barrier to Entry