What is a natural monopoly?
A)A market where a single producer is able to produce at a lower cost than competing firms could.
B)A monopoly created by government decree.
C)A monopoly created as the result of mergers and takeovers.
D)A market where the demand is very high in relation to the costs of production.

Question

Quizplus · Accepted Answer

A natural monopoly occurs when a single producer is able to produce at a lower cost than competing firms due to the high fixed costs of entry into the industry. This is often seen in industries with significant economies of scale, such as utilities, where it may be more cost-effective for one provider to serve the entire market rather than multiple smaller providers.

What Is a Natural Monopoly