Economists call a single firm that can supply the entire market at a lower cost than two or more firms a __________ monopoly.
A) regulatory
B) government
C) natural
D) predatory.

Question

Quizplus · Accepted Answer

A natural monopoly exists when the most efficient number of firms operating in an industry is one. This is typically due to high fixed costs that make it cost-prohibitive for multiple firms to enter the market. As a result, a single firm can supply the entire market at a lower cost than multiple firms, resulting in a natural monopoly. This is different from a regulatory monopoly, which is created by the government granting exclusive rights to a single firm to operate in a particular industry. A government monopoly is owned and operated by the government. A predatory monopoly is one that uses tactics to exclude competitors from the market, including undercutting prices until all other competitors go out of business.

Economists Call a Single Firm That Can Supply the Entire