For a natural monopoly to exist

A. a firm's long run average cost curve must exhibit economies of scale throughout the relevant range of market demand.

B. a firm's long run average cost curve must exhibit diseconomies of scale beyond the economically efficient output level.

C. a firm must continually buy up its rivals.

D. a firm must have a governmentminus-imposed barrier.

Question

Business

Nickolas Bender

4 June, 08:26

For a natural monopoly to exist

A. a firm's long run average cost curve must exhibit economies of scale throughout the relevant range of market demand.

B. a firm's long run average cost curve must exhibit diseconomies of scale beyond the economically efficient output level.

C. a firm must continually buy up its rivals.

D. a firm must have a governmentminus-imposed barrier.

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Answers (1)

Know the Answer?

Jaquan Holder · Answer 1

The correct answer is A

Explanation:

Natural monopoly is the kind of monopoly which exists because of the high start up costs as well as the powerful economies of scale for conducting or performing a business in a particular industry.

And for this type of monopoly to exist, a firm or business need that the long run average cost curve will exhibit the economies of scale by the relevant range of the market demand.