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 gas company is experiencing diseconomies of scale. The gas company must own a scarce resource.

Answer 1

Answer: The following statements are true about this natural monopoly: It is more efficient on the cost side for one producer to exist in this market rather than a large number of producers.

Natural monopoly is a form of monopoly that persists because of start-up costs of administrating a business organization in a particular industry. A organization with natural monopoly will be the only supplier of a commodity or service in an industry.