When a natural monopoly exists, it is
A)always cost effective for government-owned firms to produce the product.
B)never cost effective for one firm to produce the product.
C)always cost effective for two or more private firms to produce the product.
D)never cost effective for two or more private firms to produce the product.

Question

Quizplus · Accepted Answer

A natural monopoly exists when a single firm can supply the entire market at a lower cost than any combination of two or more firms, making it not cost effective for multiple firms to produce the product.

When a Natural Monopoly Exists, It Is