An industry is a natural monopoly when i) the government assists the firm in maintaining the monopoly.
Ii) a single firm owns a key resource.
Iii) a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms.

Question

Quizplus · Accepted Answer

A natural monopoly occurs when a single firm can supply a good or service to an entire market at a lower cost than two or more firms. The ownership of a key resource can contribute to a natural monopoly situation. The government's assistance in maintaining the monopoly is not a necessary condition for a natural monopoly. Therefore, option B- iii) only is the correct answer.

An Industry Is a Natural Monopoly When I) the Government