ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -An electric company is a classic example of a natural monopoly. Once the gargantuan fixed costs involved with power generation and power lines is payed, each additional unit of electricity costs very little; the more units sold, the more the fixed costs can be spread, creating a reasonable price for the consumer.

Detailed explanation-2: -The energy infrastructure, which supplies electricity throughout the country, is fundamental to the national economy and society’s day-to-day dealings, and is considered a natural monopoly [18, 44, 45].

Detailed explanation-3: -Utilities such as water and electricity are examples of natural monopolies because the production cost restricts competition in the market. Electricity production is a capital-intensive operation that can edge out potential firms due to the associated costs.

Detailed explanation-4: -For example, the utility industry is a natural monopoly. The utility monopolies provide water, sewer services, electricity transmission, and energy distribution such as retail natural gas transmission to cities and towns across the country.