A natural monopoly occurs when
A) one firm owns all the vital resources needed to produce a particular good.
B) economies of scale allow one firm to supply the entire market at the lowest possible cost.
C) a few firms collude to act as a single firm.
D) one firm captures all the consumer surplus.

Question

Quizplus · Accepted Answer

A natural monopoly occurs when economies of scale are so significant that a single firm can supply the entire market at a lower cost than any combination of multiple firms.

A Natural Monopoly Occurs When