Asked by
Mileaka Owens
on Dec 12, 2024Verified
In the case where a natural monopoly exists in an industry,
A) a competitive market structure will be costly and difficult to maintain.
B) a competitive market structure will be more efficient and more equitable.
C) government regulations will always improve efficiency in this industry.
D) economies of scale will not be a consideration when analyzing the proper structure of the industry.
Natural Monopoly
A market condition where a single firm can supply a good or service to an entire market at a lower cost than two or more firms due to economies of scale.
Competitive Market
A market structure characterized by a large number of buyers and sellers, where no single participant can significantly influence price.
Economies of Scale
The reduction in per-unit production costs that occurs when companies grow their scale of operation, demonstrating how larger operation capacity can lead to cost efficiencies.
- Familiarize oneself with the attributes of a natural monopoly.
Verified Answer
MP
Learning Objectives
- Familiarize oneself with the attributes of a natural monopoly.