Because unregulated natural monopolies earn economic profits greater than zero in the long run, but cannot attract new entrants into the industry

Question

Quizplus · Accepted Answer

Since natural monopolies earn economic profits greater than zero in the long run, there is no incentive for new firms to enter the industry and compete. Without competition, the monopoly may charge higher prices than in a competitive market, leading to consumer exploitation. To prevent this, government agencies may regulate the price natural monopolies can charge to ensure that they do not abuse their market power.

Because Unregulated Natural Monopolies Earn Economic Profits Greater Than Zero