Describe an example of a real-world industry or market that would be considered by economists to...

Question:

Describe an example of a real-world industry or market that would be considered by economists to be a natural monopoly.

a) What characteristics of the industry make it a monopoly?

b) What is the impact of the monopoly power on its customers?

c) Why might government want to regulate natural monopolies?

d) How might such regulation be structured?

Natural Monopoly:

Natural monopoly refers to a firm structure exists because the costs of setting up business in a given industry are too high or the technology needed is extremely expensive. High costs of entry pose barriers to entry for a new entrant.

Answer and Explanation:

a) Water supply is considered to be a natural monopoly since it is inefficient for many firms to incur expenditure on laying pipes throughput the...

See full answer below.

Become a Study.com member to unlock this answer! Create your account

View this answer

Learn more about this topic:

Loading...
Natural Monopoly in Economics: Definition & Examples

from Intro to Business: Help and Review

Chapter 3 / Lesson 13
80K

Related to this Question

Explore our homework questions and answers library