A natural monopolist can produce total industry output more efficiently than several smaller but competitive firms.

Question

Quizplus · Accepted Answer

A natural monopolist can benefit from economies of scale, where the cost per unit decreases as output increases. Smaller competitive firms may have higher average costs due to duplication of infrastructure and facilities. Therefore, a natural monopolist can achieve lower costs and prices than multiple competing firms, leading to greater efficiency in production.

A Natural Monopolist Can Produce Total Industry Output More Efficiently