A firm that is a natural monopoly a.is not likely to be concerned about new entr

Question

A firm that is a natural monopoly a.is not likely to be concerned about new entrants eroding itmonopoly power. b.is taking advantage of economies of scale. c.would experience a higher average total cost if more firmsentered the market. d.all of the above are correct. A firm that is a natural monopoly a.is not likely to be concerned about new entrants eroding itmonopoly power. b.is taking advantage of economies of scale. c.would experience a higher average total cost if more firmsentered the market. d.all of the above are correct.

Explanation / Answer

A firm that is a natural monopoly a.is not likely to be concerned about new entrants eroding itmonopoly power. b.is taking advantage of economies of scale. c.would experience a higher average total cost if more firmsentered the market. d.all of the above are correct. Wikipeida covered everything: An industry is said tobe a natural monopoly if one firm can produce a desired output at alower social cost than two or more firms— that is,there are economies of scale in socialcosts.Unlike in the ordinary understanding of a monopoly, anatural monopoly situation does not mean that only one firm isproviding a particular kind of good or service. Rather it is theassertion about an industry, that multiple firmsproviding a good or service is less efficient (more costlyto a nation or economy) than would be the case if a single firmprovided a good or service. There may, or may not be, a singlesupplier in such an industry. This is a normative claim which isused to justify the creation of statutory monopolies, wheregovernment prohibits competition by law. Examples of claimednatural monopolies include railways, telecommunications, waterservices, electricity, mail delivery and computer software. Someclaim that the theory is a flawed rationale for state prohibitionof competition.
An industry is said to be a natural monopoly (also called technicalmonopoly) if only one firm is able to survive in the long run, evenin the absence of legal regulations or "predatory" measures by themonopolist. It is said that this is the result of high fixed costsof entering an industry which causes long run average costs todecline as output expands (i.e. economies of scale in privatecosts).
Wikipeida covered everything: An industry is said tobe a natural monopoly if one firm can produce a desired output at alower social cost than two or more firms— that is,there are economies of scale in socialcosts.Unlike in the ordinary understanding of a monopoly, anatural monopoly situation does not mean that only one firm isproviding a particular kind of good or service. Rather it is theassertion about an industry, that multiple firmsproviding a good or service is less efficient (more costlyto a nation or economy) than would be the case if a single firmprovided a good or service. There may, or may not be, a singlesupplier in such an industry. This is a normative claim which isused to justify the creation of statutory monopolies, wheregovernment prohibits competition by law. Examples of claimednatural monopolies include railways, telecommunications, waterservices, electricity, mail delivery and computer software. Someclaim that the theory is a flawed rationale for state prohibitionof competition.
An industry is said to be a natural monopoly (also called technicalmonopoly) if only one firm is able to survive in the long run, evenin the absence of legal regulations or "predatory" measures by themonopolist. It is said that this is the result of high fixed costsof entering an industry which causes long run average costs todecline as output expands (i.e. economies of scale in privatecosts).

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