Arrange the following steps in the correct order to explain how a natural monopoly can lead to market inefficiencies: A) The firm sets prices above marginal cost, B) The firm experiences economies of scale, C) Consumers have limited choices, D) The firm becomes the sole supplier of the market.

A natural monopoly occurs when a single firm can produce goods or services at a lower cost than multiple firms due to economies of scale, which means the more they produce, the cheaper each unit becomes. As this firm becomes the sole supplier of the market, it gains significant control over prices and can set them above marginal cost, which is the cost of producing one more unit. This leads to market inefficiencies because consumers have limited choices and may have to pay higher prices for lower quantities of goods or services. For example, if a utility company is the only provider of electricity in a town, it can charge more than what it costs to generate electricity, leaving consumers with no alternatives. This situation can result in reduced overall welfare in the market as consumers cannot find better options.