A Natural Monopoly Exists When

question 195

Multiple Choice

A natural monopoly exists when

• A) control of a key input leads to a single-firm industry.
• B) increasing marginal returns and the ability to obtain quantity discounts from suppliers leads to a single-firm industry.
• C) economies of large-scale production are substantial, leading to a single-firm industry.
• D) the government restricts entry that leads to a single-firm industry.

---

Definitions:

Alternatives

Other options or choices available to businesses or individuals when making decisions, reflecting the diversity of possible approaches or solutions.

Substitute

A person or thing acting in place of another, often used in the context of replacing an original item or role with an alternative.

Threat

A possible danger that might exploit a vulnerability to breach security and cause possible harm to a system or organization.

Supplier Power

The influence that suppliers have over the potential profits of the businesses they sell to, high supplier power can influence the terms and conditions of supplying goods and can affect price settings.