Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Non-excludability
B
Perfect competition
C
Price discrimination
D
Decreasing returns to scale
Understanding the Answer
Let's break down why this is correct
Answer
Natural monopolies are companies that can provide a service more efficiently than multiple competitors, often because they require large investments in infrastructure, like water or electricity. In contrast, public goods are resources that everyone can use without depleting them, such as clean air or national defense. While natural monopolies focus on efficiency in providing goods or services, public goods highlight the importance of accessibility and shared benefit. For example, a natural monopoly might be a utility company that supplies water to a city, while a public good would be a park that everyone can enjoy without paying a fee. Both concepts highlight different challenges in economics: one about efficient service delivery and the other about ensuring everyone has access to essential resources.
Detailed Explanation
Public goods are non-excludable, meaning no one can be stopped from using them. Other options are incorrect because Some might think public goods work best in perfect competition; People might confuse public goods with price discrimination, which is charging different prices to different people.
Key Concepts
Natural monopolies
Public goods
Market efficiency
Topic
Natural Monopolies
Difficulty
medium level question
Cognitive Level
understand
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