Why the natural monopoly is a economic of scale

Reference no: EM13201207

Traditional Monopoly is a firm that is the only seller of a good or service that does not have any close to substitutes. Government keeps out or keep other firms from entering in a market. The firm, one firm is the key source that produce less and charge an increased price.

Natural Monopoly is a economic of scale. This is because one firm can supply the whole market at a decreased Average Total Cost than two or more firm can. It happens when fixed cost are large to variable cost. State and local regulatory commissions set prices Natural Monopoly produce or achieve economic efficiency.

Reference no: EM13201207

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