Question

Which statement BEST describes a benefit of natural monopolies, like utilities? A) Utility companies can charge whatever price fits the market demand. B) Natural monopolies can provide services in areas not served by other firms. C) Natural monopolies, like utility companies, are designed to be profitable firms. D) Utility companies, and other natural monopolies, are highly regulated by governments.

Answer 1

Answer: B) Natural monopolies can provide services in areas not served by other firms.

Answer 2

The correct answer is B. Natural monopolies can provide services in areas not served by other firms.

Step-by-step explanation:

In economy, natural monopolies occur as specific services, especially utilities such as electricity are likely to be offered by one company or entity because it implies high costs in terms of infrastructures, workers, etc. and therefore it is not easy for other companies to offer the same utilities or services and compete.

This reduces competition but it has some benefits, including that though natural monopolies people in most areas can have services not served by other firms. For example, people in remote areas can have electricity, water or gas supplies that are offered by a big company (natural monopoly) that has the infrastructure and all the elements necessary to cover all areas. Thus, one benefit of natural monopolies is that they "can provide services in areas not served by other firms".