Which of the following is most likely to be considered a natural monopoly?
A)A municipal water company
B)The mobile telephone industry
C)The baby care product industry
D)The cotton textile industry
E)The automobile industry

Question

Which of the following is most likely to be considered a natural monopoly?​
A)A municipal water company
B)The mobile telephone industry
C)The baby care product industry
D)The cotton textile industry
E)The automobile industry

Quizplus · Accepted Answer

A municipal water company is most likely to be considered a natural monopoly because it would have high fixed costs (building and maintaining water treatment plants, pipes, etc.) and it would be difficult for new firms to enter the market and compete effectively against the established company, because of high costs to construct a similar infrastructure network.

Which of the Following Is Most Likely to Be Considered