Which of the following must be true for a natural monopoly to occur? a. the marginal cost must...

Question:

Which of the following must be true for a natural monopoly to occur?

a. the marginal cost must be below the average cost

b. the average cost must always be declining

c. the total cost must be constant

d. all of the above are true

Monopoly:

A monopoly refers to a situation where there is only a single seller in the market generating a product or service that lacks a close substitute. The two types of monopolies include natural monopolies and government-created monopolies.

Answer and Explanation:

The answer to this question is:

b. the average cost must always be declining

A natural monopoly exists when the company's average-total-cost is...

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Natural Monopoly in Economics: Definition & Examples

from Intro to Business: Help and Review

Chapter 3 / Lesson 13
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