Question

Define and give example of nature monopolies explain why they are allowed to exist in our free market system?

Answer 1

Definition:

A natural monopoly is created when a player in the market grows capable of offering the best service at a price its other competitors cannot.

Examples:

The electricity supply boards and the railway boards run by the government.

Following are the reasons why such natural monopolies are allowed to exist in the free market system:

• They offer affordability to the general public.

• They function according to the convenience of the public.

• They dispense facilities that are not offered by anyone else at the same price.