Which statement best explains why a city water system has a natural monopoly structure? A water system may set prices at any level it wants to maximize profits and acts in its own interest. A water system requires so little innovation that there is little incentive for businesses to compete for the market. The cost for a competing water system to enter the market is so high that the return on investment is too low. The marginal cost to additional consumers is extremely high compared with average cost for the water system.

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