A natural monopoly is one that arises from

Question

Quizplus · Accepted Answer

A natural monopoly arises due to economies of scale. This means that the cost of production per unit decreases as the output increases. As a result, one firm can produce the entire output of the market at a lower cost than multiple firms would be able to. This makes it difficult for new firms to enter and compete in the market, leading to a monopoly. The other options (A, B, D, E) are not related to the concept of a natural monopoly.

A Natural Monopoly Is One That Arises from