The allocatively efficient quantity of product Z for the whole market is 2 million units. At that quantity, the demand for Z is at $5 and the average total cost for its single supplier is $7. The average total cost does not fall to $5 until 3.5 million units. Based on this data, the market for product Z is

operating with decreasing returns to scale

a natural monopoly

a legal monopoly

monopolistically competitive

productively efficient