Which of the following is an example of a natural monopoly?
A) the trademark protecting Gatorade
B) the talents of Tom Hanks
C) the local water company
D) the patent on an Intel processor
E) Debeers' ownership of a large fraction of the world's diamonds

Question

Quizplus · Accepted Answer

A natural monopoly is a situation where it is more efficient for one firm to provide a particular good or service due to economies of scale. In the case of a local water company, there may be high fixed costs for building and maintaining the necessary infrastructure, making it difficult or inefficient for more than one company to compete in the market.

Which of the Following Is an Example of a Natural