Which of the following distinguishes a natural monopoly from monopoly caused by ownership of a vital resource?

A. The natural monopoly has a marginal cost curve above its average cost curve at all levels of output, whereas the marginal cost in other monopolies is above average cost.
B. The natural monopoly does not require any government intervention because it is only efficient to have one large firm supplying the market, but other monopolies do require government intervention to maintain efficiency.
C. The natural monopoly has a downward-sloping long-run average cost curve as opposed to a U-shaped long-run average cost curve.
D. The natural monopoly occurs with naturally occurring products like gold and diamonds, whereas other monopolies occur with man-made products.


Answer: C

Economics

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Economics