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Natural monopoly exists when Select one: a. one firm can supply the entire output demanded at lower cost than two or more firms can. b. one firm can supply the entire output demanded at higher cost than two or more firms can. c. one firm can supply the entire output demanded at the same cost as two or more firms.
A natural monopoly exists when one firm can supply an entire market at a lower average total cost than can two or more firms. For a natural monopoly economies of scale
Study with Quizlet and memorize flashcards containing terms like Better to have one firm produce a product instead of two, the income the firm must provide to resource suppliers to attract resources from alternative uses, implicit and explicit costs and more.
In a natural monopoly, the LRAC of any one firm intersects the market demand curve where long-run average costs are falling or are at a minimum. If this is the case, one firm in the industry will expand to exploit the economies of scale available to it.
A natural monopoly arises when a single firm can efficiently serve the entire market because average costs are lower with one firm than with two firms. An example is illustrated in Figure 15.3.
20 sty 2020 · A natural monopoly is a distinct type of monopoly that may arise when there are extremely high fixed costs of distribution, such as exist when large-scale infrastructure is required to ensure supply. Examples of infrastructure include cables and grids for electricity supply, pipelines for gas and water supply, and networks for rail and underground.
Economists call such markets natural monopolies. Unfortunately, if just one firm is allowed to serve the entire market, the firm will be tempted to exploit the monopoly position rather than pass its lower cost in the form of lower prices.
