Which of the following goods is the best example of a natural monopoly?
A) The distribution of electricity
B) Diamonds
C) First-class mail
D) Women's clothing
E) A patented good

Question

Quizplus · Accepted Answer

The distribution of electricity is a classic example of a natural monopoly because it is expensive to build and maintain the necessary infrastructure (power plants, transmission lines, substations, etc.), and there are significant economies of scale. This means that the average cost of providing electricity decreases as the quantity of electricity produced and distributed increases. Therefore, it is more efficient to have a single firm (such as a regulated utility) rather than multiple firms competing in the market.

Which of the Following Goods Is the Best Example of a Natural