In a natural monopoly, the long-run average cost curve is continuously declining over the entire range of market demand, meaning that a single large firm can supply the entire market at a lower per-unit cost than multiple smaller competing firms.

Answer: True

Natural monopolies arise in industries with massive fixed infrastructure costs and very low marginal costs, such as municipal water supply, electricity transmission grids, or railway tracks. Duplicating these networks for multiple competitors would be wildly inefficient and socially wasteful. Consequently, these markets naturally consolidate into a single provider, which is why they are typically state-owned or heavily regulated to prevent price gouging.