Respuesta :

because average cots drops as production rises

The correct answer is: "Because it can decrease its production costs and the price charged for its products up to a point that is unreachable for other competitors".

A monopoly is a market structure where a single firm serves the whole demand of a specific good or service. It does not face competitors, therefore, such firm has absolute market power to decide the price charged for its products.

On the other hand, when a company enjoys economies of scale it means that it has reached a large enough productive capacity to be able to decrease its average production costs. Such firm can become a natural monopoly because, if its competitors do not reach economies of scale too, they will be expelled from the market as they cannot compete in prices with the monopolist.

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