A natural monopoly is a desirable market structure because

Question

Quizplus · Accepted Answer

A natural monopoly occurs when the market demand for a good or service can be met more efficiently by a single firm than by multiple firms. This is typically the case when there are high fixed costs and low marginal costs of production. In this situation, allowing a single firm to operate as a monopoly can actually benefit consumers by allowing the producer to deliver products to the market at the lowest possible cost. This can result in lower prices, greater efficiency, and more widespread availability of the product or service. Option A is incorrect because a natural monopoly does not necessarily allow the producer to earn greater profit than is possible under competition. Option B is incorrect because the quality of the product is not necessarily affected by the structure of the market.

A Natural Monopoly Is a Desirable Market Structure Because