Question

When, if ever, would a monopoly in a particular industry be preferred to competition within that industry?

a.When it would be less costly for one firm rather than many firms to provide a good, as in a natural monopoly.
b.It is never ideal to let a monopoly exist.
c.When too many firms are in an industry, and the market is too chaotic to receive clear price signals.
d.When only a few firms exist in an industry, so that the government must intervene to promote competition.

Answer 1

A monopoly might be preferred in the case of a natural monopoly, where one firm can provide goods or services more efficiently than multiple competing firms, often leading to government regulation to protect consumers.

Step-by-step explanation:

When considering when, if ever, a monopoly in a particular industry would be preferred to competition within that industry, the circumstance of a natural monopoly is often cited. This is when it would be less costly for one firm rather than many firms to provide a good or service.

Natural monopolies arise when average costs are declining over the range of production that satisfies market demand, often due to large fixed costs relative to variable costs. As a result, one firm can supply the total quantity demanded in the market at a lower cost than if multiple firms were competing.

In these cases, such as with public utilities providing electricity and water service, government regulation may be necessary to control prices and outputs to prevent the monopolistic firm from exploiting consumers.