Asked by
Andrea Munoz Coreografías
on Nov 26, 2024Verified
A firm is likely to be a natural monopoly
A) when the demand for its product or service is inelastic.
B) if it is producing an inferior good.
C) if economies of scale are experienced over the full range of output.
D) because government grants it an exclusive franchise.
Natural Monopoly
A market condition in which a single firm can provide a product or service at a lower cost than any potential competitors, often due to economies of scale.
Economies of Scale
Cost advantages reaped by companies when production becomes efficient, as the scale of the operation increases.
Exclusive Franchise
A business arrangement granting a single entity the right to market a company's goods or services within a specified territory.
- Comprehend the idea of a natural monopoly and the regulatory strategies employed by the government.
Verified Answer
FR
Learning Objectives
- Comprehend the idea of a natural monopoly and the regulatory strategies employed by the government.