How are start-up costs related to natural monopolies?

A.) High start-up costs prevent others from offering the same service in a natural monopoly.

B.) Low start-up costs make it easy for companies to have a natural monopoly.

C.) Natural monopolies are held by companies that cannot pay for start-up costs.

D.) The government offers companies money for start-up costs to prevent natural monopolies.

"High start-up costs prevent others from offering the same service in a natural monopoly" is the one among the following that shows how the start-up costs are related to natural monopolies. The correct option among all the options that are given in the question is the first option or option "A". I hope the answer has helped you.

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andriansp andriansp · Answer 2 · 2018-07-04T18:20:15-04:00

I believe the answer is: High start-up costs prevent others from offering the same service in a natural monopoly

In a natural monopoly, the production of a certain commodity is single handedly controlled by one business establishment.
When there is a high start up cost for new company, the new company would be forced to increase the price of their products to cover their startup cost, which make it impossible for them to compete with the company who held the monopoly.