QUESTION IMAGE
Question
the term
atural monopoly\ refers to
government ownership of parks.
industries with constant returns to scale.
industries with small fixed costs.
industries with economies of scale.
the desire of all firms to be monopolists.
A natural monopoly occurs when a single firm can supply a good or service to an entire market at a lower cost than could two or more firms. This is due to economies of scale (average total cost decreases as output increases). Government ownership of parks is not related. Constant returns to scale don't create natural monopolies. Natural monopolies have high fixed costs, not small. Firms' desire to be monopolists is not the definition. So the correct option is about industries with economies of scale.
Snap & solve any problem in the app
Get step-by-step solutions on Sovi AI
Photo-based solutions with guided steps
Explore more problems and detailed explanations
D. industries with economies of scale.