Question

Which of these is a natural monopoly? Cell phone service Computer repair Package delivery service Sewage treatment

Answer 1

"Sewage treatment" would be the best example of a natural monopoly, since it is far more efficient and beneficial for society to have a single company operate this type of business. 

Answer 2

The correct answer is B. Sewage treatment

Explanation:

A monopoly is when a product, service or similar is only sold by one company or single seller, which means this company does not have any marketing competence. In the case of a natural monopoly, the high infrastructural cost of a service or product causes this product or service to be usually sold by only one company or monopoly. This usually occurs in services or products that require not only complex infrastructures but also, unique materials or unique technology to operate. Additionally, natural monopolies can be beneficial as one company can sell a specific service or product in extensive areas such as towns or cities. Sewage treatment is usually a natural monopoly as this service requires complex infrastructure and technology, considering the process of removing contaminants from wastewater is complex and requires a lot of energy and infrastructure the service is usually sold by only one company which make it a natural monopoly. Also in the case of cell phone service, computer repair or package delivery these services are not linked to expensive infrastructure or complex technology and thus there are multiple companies that sold them, which implies they are not a natural monopoly.