In the context of natural monopolies, how do economies of scale impact consumer and producer surplus when pricing is set at marginal cost?

In a natural monopoly, a single company can produce goods or services at a lower cost than multiple companies could, due to economies of scale. This means that as the company produces more, the cost per unit decreases, allowing them to offer lower prices. When the price is set at marginal cost, which is the cost of producing one more unit, consumers benefit because they pay less than they would under normal market conditions. However, the producer may not cover all their costs, which can lead to lower profits or even losses. For example, if a water company can serve an entire city at a low price due to high fixed costs spread over many customers, consumers enjoy affordable water, but the company might struggle financially if prices do not cover its overall costs.