Principles of Microeconomics / Unit 8 MIC 0703 short lesson, about 20 seconds
Natural Monopoly
Captions available
The idea
A natural monopoly exists when economies of scale run over the whole market: demand crosses the long-run average cost curve where it is still falling, so one firm serves the market cheaper than two could.
In practice
Water mains, electric lines, a small town's only bridge.
Where people slip
The word natural means the barrier is cost, not law. Unit ten asks what to do about it.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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