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Answer to Question #68663 in Microeconomics for Kerthana Keitheswaran

Question #68663
Hello, I have got a couple of questions to ask for my research project - I wanted to know why is sugar being suggested t curb its consumption and what are natural monopolies plus give an example
Expert's answer
The overconsumption of sugar is a major cause of health problems such as
Diabetes (in particular, type 2 diabetes)
Obesity and obesity related illnesses, such as back pain, heart disease,
Tooth decay (especially amongst young people
A natural monopoly is a specific type of monopoly that can arise when there are very high fixed costs or other barriers to entry in getting started in a certain business or delivering a product or service. This creates a situation where it is more efficient for one business to deliver a product than multiple businesses.
Water Services - An example of a natural monopoly is the company that provides the water we drink out of the kitchen faucet. To have two, three, or four companies all lay pipes throughout the city and into every home would be inefficient and a waste of money. All of these additional costs from companies to lay the proper infrastructure, have their own treatment facilities, and hire their own staff would certainly raise the price you pay for water services. This is a classic situation where lower average costs are created when there is only one provider.
Sources:
http://www.economicshelp.org/blog/14884/economics/sugar-tax-debate/
http://study.com/academy/lesson/natural-monopoly-in-economics-definition-examples.html

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