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Which of the following is necessary for a natural monopoly?
  • a)
    Economies of scale 
  • b)
    A high proportion of the total cost as the cost of capital goods
  • c)
    Very small market
  • d)
    All options are correct.
Correct answer is option 'D'. Can you explain this answer?
Verified Answer
Which of the following is necessary for a natural monopoly?a)Economies...
  • A natural monopoly is a monopoly that exists because of the cost of producing the product i.e. a good or a service is lower due to economies of scale.
  • A natural monopoly occurs whenever an industry is high, and its market shared among two or more rival plants owning duplicate distribution networks.
  • A natural monopoly can also appear in smaller local markets for products that are difficult to transport.
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Which of the following is necessary for a natural monopoly?a)Economies of scaleb)A high proportion of the total cost as the cost of capital goodsc)Very small marketd)All options are correct.Correct answer is option 'D'. Can you explain this answer?
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