a natural monopoly occurs when a monopoly: course hero

by Amira Rogahn 5 min read

A natural monopoly is a type of monopoly that exists typically due to the high start-up costs or powerful economies of scale of conducting a business in a specific industry which can result in significant barriers to entry for potential competitors.

Full Answer

When does firm have natural monopoly, the firm's?

A natural monopoly occurs when: A) long-run average costs decline continuously through the range of. demand. B) a firm owns or controls some resource essential to production. C) long-run average costs rise continuously as output is increased. D) economies of scale are obtained at relatively low levels of output.

When does a natural monopoly arise?

A natural monopoly occurs when A) one company holds the sole patent on a particular technology. B) the nature of an industry does not allow for multiple companies to do business. C) the government has by law reserved a specific business for one of its own agencies D) a single company in a particular area offers a certain good or service.

What is an example of a natural monopoly?

Natural Monopoly x A natural monopoly occurs when the type of industry makes it financially impractical, if not impossible, for multiple companies to engage in the business. For example, if you had multiple companies attempting to offer sewage services, that would require multiply sewer lines running to homes which is financially-- and likely spatially--impossible.

How does a natural monopoly occur?

e. whenever an increase in the size of a network increases its total cost of production ANS: C PTS: 1 DIF: Difficulty: Easy NAT: BUSPROG: Analytic STA: DISC: Monopoly TOP: How Monopolies Arise KEY: Bloom's: Knowledge 36. Network externalities a. explain why switching costs fall as the size of a network increases b. are the service-industry equivalent of natural monopolies in goods …

What is natural monopoly?

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. A company with a natural monopoly might be the only provider or product or service in an industry ...

How do natural monopolies work?

A natural monopoly, as the name implies, becomes a monopoly over time due to market conditions and without any unfair business practices that might stifle competition. Some monopolies use tactics to gain an unfair advantage by using collusion, mergers, acquisitions, and hostile takeovers.

How do natural monopolies gain an unfair advantage?

Some monopolies use tactics to gain an unfair advantage by using collusion, mergers, acquisitions, and hostile takeovers.

Who regulates utilities?

Utilities are typically regulated by the state-run departments of public utilities or public commissions. The U.S. Department of Transportation has broad responsibilities for the safety of travel for railroads while the U.S. Department of Energy is responsible for the oil and natural gas industries.

Who is Thomas Brock?

Thomas Brock is a well-rounded financial professional, with over 20 years of experience in investments, corporate finance, and accounting.