When does a natural monopoly arise?

when a single seller buys or takes over all the competitors in the market

when multiple sellers have access to scarce natural resources in a region

when economies of scale occur over a relevant range of output

when a limited number of sellers decide to jointly sell their products

Question

Keshawn Blanchard

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11 June, 11:19

When does a natural monopoly arise?

when a single seller buys or takes over all the competitors in the market

when multiple sellers have access to scarce natural resources in a region

when economies of scale occur over a relevant range of output

when a limited number of sellers decide to jointly sell their products

+5

Answers (1)

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Zachariah Durham · Answer 1

Monopolies arise where the main supplier in an industry, frequently the first supplier in a market, has an vast cost advantage in excess of other actual or possible competitors; this inclines to be the case in businesses where fixed costs prevail, making economies of scale that are large in relative to the scope of the market, as is the circumstance in water and electricity facilities. So the answer is C.