If a new seller enters a market to compete with an existing natural monopoly,it will ________.
A) decrease costs for both sellers
B) increase the costs of production for both sellers
C) increase the production costs for the existing seller, and decrease the production costs for the new entrant
D) decrease the production costs for the existing seller, and increase the production costs for the new entrant

Question

Quizplus · Accepted Answer

When a new seller enters a market to compete with an existing natural monopoly, it typically leads to increased costs of production for both sellers. This is because the natural monopoly's cost advantages, often due to economies of scale, are disrupted, and both the new entrant and the existing monopoly may need to spend more on marketing, research, and development to maintain or gain market share.

If a New Seller Enters a Market to Compete with an Existing