Which of the following is characteristic of a regulated natural monopoly?
A) extensive economies of scale
B) the wasteful duplication of capital facilities in the event of competition
C) the provision of an essential service
D) all of these

Question

Quizplus · Accepted Answer

Extensive economies of scale make it difficult and costly for new firms to enter the market and compete with the existing monopolist. This, in turn, necessitates regulation to prevent the wasteful duplication of capital facilities. Regulated natural monopolies provide essential services, such as water and electricity, which are necessary for consumers to carry out their daily activities. Therefore, all three characteristics mentioned in the options are typical of regulated natural monopolies.

Which of the Following Is Characteristic of a Regulated Natural