NATURAL MONOPOLY Flashcards
1
Q
Which costs are very high in a natural monopoly?
A
Total fixed costs
2
Q
Introducing competition into a natural monopoly
A
lead to wasteful dublication of resources, productive and allocative inefficient
3
Q
Efficiencies in a natural monopoly
A
Allocative and productive efficiencies as long as they are regulated
4
Q
Why do natural monopolies have a continuously falling long run average cost curve
A
increasing returns to scale at all outputs
5
Q
Definiton of a natural monopoly
A
A natural monopoly occurs when the most efficient number of firms in the industry is one.
