A natural monopoly exists when
A)a monopolist produces a product, the main component of which is a natural resource.
B)economies of scale are so large that only one firm can survive and achieve low unit costs.
C)a firm is the exclusive owner of a key resource necessary to produce the firm's product.
D)there are no close substitutes for a firm's product.

Question

Quizplus · Accepted Answer

Economies of scale are so large in a natural monopoly that only one firm can survive while still producing at a low cost, making competition inefficient or impossible.

A Natural Monopoly Exists When