Question

Which of the following statements are true about this natural monopoly? Check all that apply. In order for a monopoly to exist in this case, the government must have intervened and created it. It is more efficient on the cost side for one producer to exist in this market rather than a large number of producers. The cable company is experiencing economies of scale. The cable company must own a scarce resource.

Answer 1

The correct statements are true about this natural monopoly:

The cable company is experiencing economies of scale.

The cable company must own a scarce resource.

A Natural Monopoly: What Is It?

A natural monopoly is a sort of monopoly that often develops as a consequence of high startup costs or considerable economies of scale associated with conducting business in a particular industry, both of which can create significant barriers to entry for potential rivals.

A business with a natural monopoly could be the sole supplier of a good or service in a sector or region. Industries that depend on specialized technology, raw materials, or other elements may become natural monopolies.

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