Question

A natural monopoly has declining _________ over large range of output.

• A. long run average cost
• B. short run average cost
• C. long run total cost
• D. short run total cost

Answer 1

The correct option is A long run average cost

Natural monopoly is a situation which exist due to the high fixed or start up costs to set up a business. It is seen basically where there are unique technology, raw materials.etc. A monopoly based on size and market strength is known as natural monopoly. It also has a long run average cost which is declining over large range of output.