A state-owned natural monopoly will have: a

Marketing Dec 28, 2020

A state-owned natural monopoly will have:

a. no incentive to operate in the long run

b. an incentive to maximize profit

c. no incentive to maximize revenues

d. an incentive to minimize cost

e. no incentive to minimize cost

Expert Solution

The correct option is e. No incentive to minimize cost.

A natural monopoly is one of the forms of the monopoly market structure in which there is a high fixed cost involved in the production of a particular product. This makes it impractical for other firms to operate in the market. Thus, there is no competition in a natural monopoly that makes firms incentivized to minimize their costs.

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