Which of the following goods is the best example of a natural monopoly?
A) distribution of electricity
B) diamonds
C) first-class mail
D) a patented good
E) blouses

Question

Quizplus · Accepted Answer

Distribution of electricity is a good example of a natural monopoly because the fixed costs of building infrastructure for electricity distribution are very high, making it difficult for multiple firms to compete in the market. Additionally, the marginal cost of providing electricity to an additional customer is low, which makes it efficient for only one firm to produce and distribute electricity in a particular geographic area.

Which of the Following Goods Is the Best Example of a Natural