When an industry is a natural monopoly

A) the economies of scale in it are very great.
B) it would be most efficient to have several (or many) firms competing to supply the market.
C) it has a perfectly elastic industry demand curve.
D) the typical firm's marginal cost curve is everywhere above its average cost curve.

Natural Monopoly

A natural monopoly occurs when a single firm can supply the entire market at a lower cost than could be achieved by multiple firms due to economies of scale.

Economies of Scale

The cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units of output.