Option D, If a firm demonstrates the following as its output rises and the average total cost decreases, it is a natural monopoly.
Due of the high start-up and/or fixed costs of manufacturing, a natural monopoly develops. Because the increase in production will increase the money received from the sale of created goods, when a monopoly raises its output, the output impact will increase total revenue. If one firm can serve a market more affordably than any combination of two or more firm , that market has a natural monopoly. The output effect works to raise total revenue when a monopoly boosts output and sales, whereas the pricing effect works to decrease total revenue.
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