What gives rise to a natural monopoly? How do consumers benefit from a natural monopoly?

What will be an ideal response?


A natural monopoly arises when the production function exhibits economies of scale over the relevant range of market demand. The average cost of production is lower as the output produced increases. Consumers benefit from having one supplier because the supplier will be able to pass some of the cost savings to consumers.

Economics

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Which of the following statements about perfect competition is true?

A. In the long run, the entry and exit of firms will generate normal profits for firms. B. In the short run, firms can only generate economic profits. C. In the long run, the entry and exit of firms will generate economic profits for firms. D. In the long run, the entry and exit of firms will generate losses for firms.

Economics

Before summer 2008, if you wanted a cell phone in Bhutan, you only had one choice: B-Mobile, owned and operated by the government. What does Kuenga Gyalthen mean he states that, "Up until now, because of the monopoly, we've all been suffering

So, I mean, it's finally time the consumer actually is king for a little while."? A) He believes that producer surplus is greater with competition. B) He believes that total surplus is greater with a monopoly. C) He believes that prices are lower with a monopoly. D) He believes that consumer surplus is greater with competition.

Economics

If a project involves risk, managers can account for the risk by ________ the discount rate, which ________ the present value of the future profits.

A) increasing; decreases B) decreasing; decreases C) increasing; increases D) decreasing; increases

Economics

Gross revenue minus explicit costs equals

A) accounting profit. B) economic profit. C) opportunity cost. D) implicit cost.

Economics