-Refer to the above figure. The long-run average cost curve and the long-run marginal cost curves represent
A) the cost curves for a competitive firm.
B) the cost curves for a natural monopoly.
C) a situation where a firm has control over the raw materials.
D) a situation where a firm has a patent.

Question

-Refer to the above figure. The long-run average cost curve and the long-run marginal cost curves represent
A) the cost curves for a competitive firm. 
B) the cost curves for a natural monopoly. 
C) a situation where a firm has control over the raw materials. 
D) a situation where a firm has a patent.

Quizplus · Accepted Answer

The long-run average cost curve and the long-run marginal cost curves depicted are characteristic of a natural monopoly. This is because the long-run average cost curve is downward sloping, indicating that as output increases, the average cost of production decreases, which is typical for a natural monopoly due to significant economies of scale.

-Refer to the Above Figure