Final answer:
National defense is an example of a natural monopoly due to the impracticality and inefficiency of having multiple competing defense agencies, similar to public utilities where infrastructure duplication would be costly.
Therefore, the correct answer is: option 'national defense'.
Step-by-step explanation:
A natural monopoly occurs when it is most efficient for production to be concentrated in a single firm. Public utilities like water and electrical service providers are also leading examples of natural monopolies.
Therefore, an example of an industry or service that is a natural monopoly is national defense. It's not practical to have multiple competing companies, each with its own infrastructure, such as separate sets of pipes for water or separate sets of wires for electricity.
Such duplication would be extremely costly and inefficient. In the case of national defense, it is a service typically provided by the government, as it would be impractical and insecure to have multiple competing defense agencies.