Why are utilities, such as electricity and water, examples of natural monopolies?

The cost of production restricts competition in the market.

There are limited natural resources to meet demand.

Consumers only trust known companies to provide these essentials.

There is no need for alternative options.

A: The cost of production restricts competition in the market.

The correct answer to the following question will be Option A.

Explanation:

A monopoly in which high fundamental costs gives the largest and often a first supplier in an industry or a market, known as Natural Monopoly.

The electricity, water, gas (such as natural, etc), energy and sewer services are provided by the utility monopoly. The infrastructure requires these things to produce a product, because of very exorbitant to built.

So, Option A is the correct answer.