Which two products most likely will have market structures that are natural monopolies?
A)Computers and natural gas
B)Automobiles and cable television
C)Groceries and toys
D)Airplanes and ships
E)Water and electricity

Question

Quizplus · Accepted Answer

Natural monopolies are industries in which one firm can produce a particular good or service at a lower cost than any potential competitor. This often occurs with industries that have high fixed costs and low marginal costs. The two products that best fit this description are water and electricity, as it is expensive to build and maintain the infrastructure necessary to distribute these goods, and once a company has established itself as the main supplier, it can operate at low marginal costs and effectively block out any potential competitors.

Which Two Products Most Likely Will Have Market Structures That