Breaking up a natural monopoly into a number of smaller firms
A)can lower the market price.
B)decreases competition in the market.
C)can lower costs.
D)improves economic efficiency.
E)does not improve economic efficiency.

Question

Quizplus · Accepted Answer

Breaking up a natural monopoly does not improve economic efficiency because natural monopolies exist due to high fixed costs and economies of scale, which means that a single firm can supply the market at a lower cost than multiple firms.

Breaking Up a Natural Monopoly into a Number of Smaller