A natural monopoly exists when a single producer is able to produce at a lower cost than competing firms could.

Question

Quizplus · Accepted Answer

A natural monopoly occurs when economies of scale are so significant that a single firm can produce at a lower cost than any potential competitor. This is often seen in industries such as utilities or infrastructure, where the cost of setting up rival firms is prohibitively high.

A Natural Monopoly Exists When a Single Producer Is Able