Why is national defense better off as a natural monopoly? What other industry or service do you think should be a natural monopoly?
What will be an ideal response?
Industries like national defense experience economies of scale. With very high fixed costs, the long-run average total cost falls as output expands. New firms in the market cannot achieve the low costs of the incumbent natural monopolist because upon entry, they are likely to split the market. Such splitting will leave each seller with much higher costs and lower profits. Drinking water, natural gas, and electricity are other examples of industries where it is efficient to have a single supplier in the market.
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Indicate whether the statement is true or false
Henry George thought that
A. landowners deserve the economic rent that their land holdings provide. B. a single tax on land equal to the unearned surplus that landowners receive would pay for all needed government. C. economic inefficiency would result from a tax on the unearned surplus that landowners receive annually. D. landowners bear most of the costs associated with economic growth.
How much is the firm's output at the shutdown point?
Most empirical testing in macroeconomics uses data beginning from about 1950.
Answer the following statement true (T) or false (F)