A natural monopoly:
A)is a monopoly in the production of raw materials.
B)occurs when one firm can supply the entire market more cheaply than can a number of firms.
C)is one result of a patent.
D)necessarily involves inefficient pricing.

Question

Quizplus · Accepted Answer

A natural monopoly occurs when one firm can supply the entire market more cheaply than can a number of firms, often due to economies of scale. This means that if other firms were to enter the market, they would not be able to compete with the low costs of the natural monopoly. It does not necessarily involve inefficient pricing, and is not related to the production of raw materials or patents.

A Natural Monopoly