When economies of scale make it more efficient to have one seller, rather than several sellers, in a market:
A) a cartel exists.
B) a natural monopoly exists.
C) the market is monopolistically competitive.
D) there is a strong reason for allowing only a government-owned business to be that one seller.

Question

Quizplus · Accepted Answer

A natural monopoly occurs when economies of scale are so significant that a single firm can supply the entire market at a lower cost than could multiple firms. This makes it more efficient for there to be one seller in the market.

When Economies of Scale Make It More Efficient to Have