Which of the following would create a natural monopoly?
A) An exclusive right granted to supply a good or service.
B) A patent granted the producer of the good or service.
C) Technology enabling a single firm to produce at a lower average total cost than two or more firms.
D) The requirement to obtain a government licence before a firm can sell the good or service.
E) Ownership of all the available units of a necessary input.

Question

Quizplus · Accepted Answer

Technology enabling a single firm to produce at a lower average total cost than two or more firms. This would create a natural monopoly because the firm would have a cost advantage that cannot be replicated by other firms, making it difficult for new firms to enter the market and compete.

Which of the Following Would Create a Natural Monopoly