Answer:
Which of the following statements are true about the natural monopoly?
- The cable company is experiencing economies of scale.
Step-by-step explanation:
Natural monopolies form when a company experiences economies of scale, and the cost for providing additional units of goods or services is really low compared to the investment required to start operating in the industry. If other firms try to enter the market, their costs will be extremely high and will start to lower only after serving a large share of the market. That is the reason why competition is discouraged.
This applies to many utilities companies, e.g. it is extremely expensive to lay out a water distribution system, but once it is operational, the costs of providing the service is extremely low.