An industry in which total costs are kept to a minimum because only one firm serves the whole market is called a:
A) natural monopoly.
B) competitive monopoly.
C) patent monopoly.
D) limit monopoly.

Question

Quizplus · Accepted Answer

In a natural monopoly, one firm is able to serve the entire market more efficiently and at a lower cost than multiple firms due to factors like economies of scale or high fixed costs. This results in the firm having no significant competition, allowing them to charge prices above their marginal cost and earn economic profits. This type of monopoly is not created through government intervention, like a patent monopoly or a limit monopoly, nor is it a result of a lack of competition in a market, like a competitive monopoly.

An Industry in Which Total Costs Are Kept to a Minimum