If a firm is a natural monopoly, society will benefit if it is broken into several small companies.

Question

Quizplus · Accepted Answer

Natural monopolies occur when a single firm can produce and distribute the goods or services at a lower cost than two or more competing firms. Breaking a natural monopoly into smaller companies would lead to duplication of resources, increased costs, and lower efficiency. Therefore, society may not benefit from breaking up natural monopolies. Instead, regulation to ensure fair pricing and quality services could be a better option.

If a Firm Is a Natural Monopoly, Society Will Benefit