Asked by Jasmine Simpson on Jul 08, 2024
Verified
What is a major characteristic of a natural monopoly?
A) The firm is a single seller of a resource.
B) It sets price equal to marginal revenue.
C) There is extensive product advertising.
D) There is a large range for economies of scale.
Natural Monopoly
A market situation where a single supplier is most efficient in producing or supplying goods or services due to high fixed or startup costs.
Economies of Scale
Cost advantages that enterprises obtain due to their scale of operation, characterized by a reduction in the per-unit cost as production increases.
- Acquire knowledge on the nature of natural monopolies and the reasons behind industrial regulation.
Verified Answer
MG
Mehdi GhaniJul 13, 2024
Final Answer :
D
Explanation :
Natural monopolies are characterized by large economies of scale where a single firm can produce at a lower average cost than multiple firms, making it more efficient for a single firm to serve the entire market.
Learning Objectives
- Acquire knowledge on the nature of natural monopolies and the reasons behind industrial regulation.
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