Question

A legal monopoly is often referred to as a natural monopoly.

a. True

b. False

Answer 1

This is false. A legal monopoly operates in an industry where there are heavy regulations on the ability for the specific product to be created, and there are mandates on who can and cannot be part of the production. A natural monopoly arises when there are high startup costs or unique resources required to produce an object, which keeps competition out of the picture.

Answer 2

That statement is false

Legal monopoly and natural monopoly have a completely different definition.

In legal monopoly, a monopoly occurs due to the legislation/laws that created by the government.

In natural monopoly, a monopoly occurs because there is a really high barrier of entry for new business to enter the market.