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Economics (AS & A Level) · May / June 2024 · Paper 31 · Question 10

9708Different market structures

Which statement is correct for a firm classed as a natural monopoly?

  1. AIt will always operate in the public sector and earn normal profits.
  2. BIt will have high barriers to entry and be the dominant producer.
  3. CIt will easily benefit from external economies of scale.
  4. DIt will have higher average costs than a monopolistically competitive firm.

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Correct answer: B. It will have high barriers to entry and be the dominant producer.

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