Increasing competition in a market characterized by natural monopoly would:
A)increase output and lower prices,increasing efficiency in production.
B)result in an inefficient outcome as the real cost of production will be too high.
C)increase the number of units sold as well as the profits of the monopolist.
D)lower the average cost of production for all firms in the market.

Question

Quizplus · Accepted Answer

Natural monopolies occur in industries where high infrastructure costs and other barriers to entry give the most efficient scale of production to a single firm. Introducing competition in such a market can lead to inefficiencies, including higher costs, because the market cannot support multiple firms operating at the efficient scale.

Increasing Competition in a Market Characterized by Natural Monopoly Would