Question

In: Economics

1)Which of the following best describes the condition that leads to a natural monopoly? Group of...

1)Which of the following best describes the condition that leads to a natural monopoly?

Group of answer choices

a)A single firm controls an industry because there are very few customers in the industry.

b)The government prohibits entry into an industry.

c)The firm takes anti-competitive actions to keep other firms out.

d)Economies of scale are large relative to quantity demanded in a market.

Solutions

Expert Solution

Answer:d) Economies of scale are large relative to quantity demanded in a market.

A firm to lead to a natural monopoly, it has to maintain the economies of scale to maintain the demand from the large customer group. With economies of scale, the firm can be able to satisfy the demand of any number of people because the cost reduces on increasing in number of units of production.

Rahul Sunny answered 2 years ago
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