Which is an example of a natural monopoly? (5 points) Select one: a. A company that enters the market and requires new infrastructure b. A group of companies that own all the sources of production c. A milk product that is produced by multiple companies d. A single source for electricity in your community

A natural monopoly is a type of monopoly that exists as a result of the high fixed costs or startup costs of operating a business in a specific industry. Additionally, natural monopolies can arise in industries that require unique raw materials, technology or other similar factors to operate.

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anthougo anthougo · Answer 2 · 2022-04-15T13:17:58+02:00

An example of a natural monopoly, where extreme economies of scale exist, is d. A single source of electricity in your community.

What is a natural monopoly?

A natural monopoly exists where the startup costs are huge such that it is almost impossible for other firms to enter the market.

For instance, where there is a single source of electricity in a community, only one firm will be allowed to provide electricity.

The above explanation means that natural monopolies enjoy extreme economies of scale because the market is not profitable if many firms are allowed to enter.

Thus, an example of a natural monopoly, where extreme economies of scale exist, is d. A single source of electricity in your community.

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