Which of the following best explains why natural monopolies arise in the context of barriers to entry and the long-run average cost curve?

Natural monopolies arise when a single company can produce a good or service at a lower cost than multiple companies could. This usually happens because of high fixed costs, which are costs that do not change with the level of output, like building a factory or laying down power lines. When these costs are spread over a large number of customers, the average cost of producing each unit goes down, making it cheaper for one company to serve everyone rather than having many smaller companies. For example, think of a water supply system: it is more efficient for one company to provide water to all homes in a city than for several companies to each build their own pipelines. Therefore, the barriers to entry, such as the need for significant investment and the ability to achieve lower costs over time, make it hard for new competitors to enter the market, leading to a natural monopoly.