Question

A natural monopoly is a desirable market structure because A) It allows the producer to deliver...

A natural monopoly is a desirable market structure because

A) It allows the producer to deliver a higher-quality product to the market.
B) It allows the producer to earn greater profit than is possible under competition.
C) The jobs it creates pay higher wages than those in a competitive industry.
D) It allows the producer to deliver products to the market at the lowest possible cost.
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Answer #1

A natural monopoly is an industry in which one firm can achieve economies of scale over the entire range of market supply.As there is economies of scale,the long run average costs continue to fall.It is desirabble because the investment in capital goods make the entry barriers really high and there is high regulation which ensures high efficiency and a low price on the consumer close to the costs.The consumers gets a fair price for the good.

So, Option (D) it allows the producers to deliver products to the market at the lowest possible cost.

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