The concept of 'Natural Monopoly' arises when: MCQ with Answer and Explanation

The concept of 'Natural Monopoly' arises when:
A. There are no economies of scale
B. Many firms can produce at the same minimum cost
C. A single firm can supply the entire market at lower cost than two or more firms because of large fixed costs and declining average costs
D. The market is perfectly competitive
Answer: Option C
Solution (By JKSSB Mock Tests)
A natural monopoly exists when subadditive costs (typically due to large fixed costs and declining average costs) make it more efficient for a single firm to serve the entire market.

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Practice More Economy Set 1 Questions

Question #1
Which of the following is a feature of the '15-Minute City' concept?
A. A city in which all travel requires long car journeys
B. Only a high-speed transport network without local amenities
C. A purely residential suburb without services
D. An urban planning model in which most daily needs can be met within a short walk or cycle from home

Correct Answer: Option D


Explanation:
The 15-minute city is an urban design principle that aims to ensure that residents can access work, shopping, education, healthcare and leisure within a 15-minute walk or bicycle ride from their homes.

This question belongs to: Economy GK Economy Set 1
Question #2
The 'General Agreement on Tariffs and Trade' was replaced by the WTO in which year?
A. 1998
B. 1993
C. 2001
D. 1995

Correct Answer: Option D


Explanation:
The WTO replaced GATT in 1995.

This question belongs to: Economy GK Economy Set 1
Question #3
In the context of demand, a Giffen good is one for which:
A. Demand decreases as price increases
B. Demand increases as price increases
C. Demand is perfectly elastic
D. Demand is independent of price

Correct Answer: Option B


Explanation:
A Giffen good is an inferior good for which the income effect outweighs the substitution effect, leading to an upward-sloping demand curve (demand rises when price rises).

This question belongs to: Economy GK Economy Set 1