An industry is a natural monopoly when (i) the government assists the firm in maintaining the monopoly.
(ii) a single firm owns a key resource.
(iii) a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms.
A)(ii) only
B)(iii) only
C)(i) and (ii)
D)(ii) and (iii)

Question

An industry is a natural monopoly when (i)	the government assists the firm in maintaining the monopoly.
(ii)	a single firm owns a key resource.
(iii)	a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms.
A)(ii) only
B)(iii) only
C)(i) and (ii)
D)(ii) and (iii)

Quizplus · Accepted Answer

A natural monopoly occurs when a single firm can supply a good or service to an entire market at a lower cost than could two or more firms. This can happen if the firm owns a key resource or due to economies of scale. The government may or may not assist the firm in maintaining the monopoly, so (i) is not always true. Therefore, (ii) and (iii) are the correct options.

An Industry Is a Natural Monopoly When (I) the Government Assists