Consider an unregulated monopoly in Figure 8.13. Suppose that a second firm enters the market. As a result, if a natural monopoly is inevitable in this market:
A. the demand curve facing each firm lies entirely above the long-run average cost curve.
B. the demand curve facing each firm lies entirely below the long-run average cost curve.
C. the demand curve facing each firm touches the long-run average cost curve at one point.
D. None of these
Answer: B
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