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Microeconomics

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Monopoly: Alone Again, Naturally

MICRO-1J1VA3

A natural monopoly is one in which the good can be provided at the lowest cost if the market is run by a monopoly, due to some natural feature of the good itself.

Which of the following are typical properties of markets that are natural monopolies?

Select ALL that apply.

A

Very high costs of entry into the market.

B

Restricted to being a monopoly by the government, or a market consisting of a single firm owned by the government.

C

Very low marginal costs, or marginal costs that decline with quantity.

D

Large economies of scale.

E

The market is for natural goods, such as wheat.

F

Generated because one firm owns all the sources of an input necessary to make the good.

G

Production of inefficiently low quantities.