A natural monopoly refers to:

Question

Quizplus · Accepted Answer

A natural monopoly is a market where it is more economically efficient for one firm to produce the total output compared to multiple firms producing the same output. This is because the fixed costs, such as infrastructure and capital, are so high that multiple firms would result in duplicative costs and inefficiencies. Therefore, a natural monopoly occurs when a single firm can produce the output at a lower cost than multiple firms combined. A natural monopoly occurs when a firm can produce the entire output of a market at a lower cost than any potential competitor. This is due to the presence of high fixed costs associated with entering the market, such as significant infrastructure or expensive equipment requirements. Therefore, it is more efficient to have one firm producing the output rather than multiple firms trying to compete.

A Natural Monopoly Refers To