Describe an example of a real-world industry or market that would be considered by economists to be a natural monopoly. What characteristics of the industry make it a monopoly? What is the impact of the monopoly power on its customers? Why might government want to regulate natural monopolies? How might such regulation be structured?

Explanation:

Describe an example of a real-world industry or market that would be considered by economists to be a natural monopoly.

Natural monopoly is an example of monopoly which contains large scale infrastructure that runs most efficiently without no real competition or when one large firm produces all of the output and have very high fixed costs and minimal variable costs. . Example are fixed lines telephone companies,utility industries which provide water, sewer services, electricity etc.

What characteristics of the industry make it a monopoly?

Unique product, high barriers for entry, single industry controlling the market,price discrimination etc

What is the impact of the monopoly power on its customers?

A monopoly firm has the total control over the buying or selling behavior of a customer, it control both the demand and supply, dictate prices and might charge an higher price and Monopoly ensure supply of a commodity that might be too expensive to provide in a competitive market.

Why might government want to regulate natural monopolies?

Government might want to regulate natural monopolies industries in order to protect it citizen and to regulate it socio-economic impact on the society by regulations of the price, entry etc

How might such regulation be structured?  

By eliminating barriers of entry, creating a conducive environment for operations and subsidizing cost of production

an employee's increased output after additional training

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