Question

In China, the government owns many more firms than in the United States. A former Chinese government official argued that a number of government-run industries such as oil refining were natural monopolies. Source: Shen Hong, "Former State Assets Regulator: SOE Monopolies 'Natural'," Wall Street Journal, January 4, 2012. Oil refining would be a natural monopoly in a country if O A. there are economies of scale. O B. there are barriers to entry or start up costs. O c. having multiple firms would be highly inefficient OD. the country is run by a demagogue socialist.

Answer 1

In​ China, the government owns many more firms than in the United States.

A former Chinese government official argued that a number of​ government-run industries such as oil refining were natural monopolies.

Oil refining would be s natural monopoly in a country if

Having a multiple firm would be highly inefficient.

In a country if multiple firms exist but they does not specialist then it would be inefficient. Hence, it creates natural monopoly. Overall this will reduce the cost of production.

Natural monopoly is due to economies of scale but it is confined to a company not in case of country. Therefore, it is not correct in this context.