Question

Which industries are examples of natural monopolies? Check all that apply.

pipelines
railway lines
supermarkets
electric companies
sporting goods stores
fixed-line telephone companies

Answer 1

Natural monopolies: pipelines, railway lines, electric companies, fixed-line telephone companies.

Why: these industries have very high fixed/capital costs and networks (pipes, tracks, power lines, local telephone loop) where one provider can serve the whole market at lower cost than duplicated infrastructure. Supermarkets and sporting-goods stores are retail markets with low entry barriers and no large economies of scale, so they are not natural monopolies.