Question

Which of the following statements are true about this natural monopoly? Check all that apply.

a) High barriers to entry for new competitors
b) Multiple firms providing the same service
c) Low production costs for new entrants
d) Limited government regulation

Answer 1

A natural monopoly has high barriers to entry for new competitors and low production costs for new entrants.

Step-by-step explanation:

In the case of a natural monopoly, the correct statements are:

• High barriers to entry for new competitors: Natural monopolies often have high barriers to entry, which can include large initial investments, exclusive access to resources, or legal restrictions.
• Low production costs for new entrants: Due to economies of scale, a natural monopoly can produce at a lower cost than multiple firms.

Therefore, options A and C are true statements about a natural monopoly.