ECONOMICS
COMPETITION AND MARKET STRUCTURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Natural monopoly
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Government monopoly
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Technological monopoly
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Geographic monopoly
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Detailed explanation-1: -A natural monopoly is a type of monopoly that arises due to unique circumstances where high start-up costs and significant economies of scale lead to only one firm being able to efficiently provide the service in a certain territory.
Detailed explanation-2: -With a natural monopoly, the internal economies of scale available to the largest firms mean that there is a tendency for one business to dominate the market in the long run.
Detailed explanation-3: -A natural monopoly (Or, denoted as NM) exists in a market structure when one single seller has the capacity of producing the market demand at a lower cost than its competitors combined.
Detailed explanation-4: -Once a natural monopoly has been established because of the large initial cost and that, according to the rule of economies of scale, the larger corporation (to a point) has a lower average cost and therefore an advantage over its competitors.