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A firm that is a natural monopoly: has very small fixed costs and very large marginal costs. produces the efficient quantity of output when it
A firm that is a natural monopoly: has very small fixed costs and very large marginal costs. produces the efficient quantity of output when it is not regulated. can supply the entire market at a lower average total cost than two or more firms. is infrequently regulated because having one firm serve the market is economically sound. cannot make an economic profit if it is not regulated because it must serve a very large customer base.
A firm that is a natural monopoly:
has very small fixed costs and very large marginal costs.
produces the efficient quantity of output when it is not regulated.
can supply the entire market at a lower average total cost than two or more firms.
is infrequently regulated because having one firm serve the market is economically sound.
cannot make an economic profit if it is not regulated because it must serve a very large customer base.
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