A. A single firm can supply the entire market at lower cost than two or more firms because of large fixed costs and declining average costs
B. There are no economies of scale
C. The market is perfectly competitive
D. Many firms can produce at the same minimum cost
Answer: Option A
Solution (By JKSSB Mock Tests)
A natural monopoly exists when subadditive costs (typically due to large fixed costs and declining average costs) make it more efficient for a single firm to serve the entire market.
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