Natural monopolies occur because of strong economies of scale in production and distribution.

Name: Natural monopolies occur because of strong economies of scale in production and distribution.
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Question

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Natural monopolies arise in industries where the fixed costs of the capital goods are so high that it is not profitable for more than one firm to produce the service, leading to economies of scale that prevent new competitors from entering the market efficiently.

Natural Monopolies Occur Because of Strong Economies of Scale in Production