A natural monopoly is most likely to exist when: a) economies of scale are great b) ATC increases as output increases c) a single firm owns essentially all of a productive resource The answer is A, but I’m confused as to why the answer is not C. Any help?
C would be a normal monopoly Natural monopoly exists by definition because of great economies of scale
In Natural Monopoly, the very reason why there is a monopoly is because that business is not economically feasible for other firms…they may have the resources but capital reqt are generally high…so to reduce cost they have to more
varundarji Wrote: ------------------------------------------------------- > In Natural Monopoly, the very reason why there is > a monopoly is because that business is not > economically feasible for other firms…they may > have the resources but capital reqt are generally > high…so to reduce cost they have to more Not entirely true. For instance, some of the Utilities companies hold monopolies in regions because of governemnt regulartions preventing pricing wars. Although the structure is more of an Oligopoly, in reality it is a monopoly.
nuppal Wrote: ------------------------------------------------------- > varundarji Wrote: > -------------------------------------------------- > ----- > > In Natural Monopoly, the very reason why there > is > > a monopoly is because that business is not > > economically feasible for other firms…they > may > > have the resources but capital reqt are > generally > > high…so to reduce cost they have to more > > > Not entirely true. For instance, some of the > Utilities companies hold monopolies in regions > because of governemnt regulartions preventing > pricing wars. Although the structure is more of an > Oligopoly, in reality it is a monopoly. get em Nuppal.