A natural monopoly is one that:A) monopolizes a natural resource such as a mineral spring.B) is based on control of something occurring in nature (such as diamonds) .C) has increasing returns to scale over the entire relevant range of output.D) typically has low fixed costs,making it easy and natural for it to shut out competitors.

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dontworryabout itchief · Accepted Answer

Final Answer : C, Explanation :  A natural monopoly is a market situation where one firm can supply the entire market at a lower cost than two or more firms. It typically arises in industries with high fixed costs and economies of scale that are so large that they can be achieved only if one firm serves the entire market. In such cases, the average cost of production for the firm decreases as output increases. This is known as increasing returns to scale. Hence, choice (C) is correct. Choices (A), (B), and (D) do not fully capture the concept of a natural monopoly.

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