A natural monopoly is most likely to occur in which of the following industries?
A) the pharmaceutical industry because the development and approval of new drugs through the Food and Drug Administration can take more than 10 years
B) the software industry because of the importance of network externalities
C) an industry where fixed costs are very large relative to variable costs
D) the diamond mining and marketing industry because one firm can control a key resource
C
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Refer to the above figure. A movement from B to C would be NOT be the result of
A) an increase in worker productivity. B) an increase in foreign income levels. C) an increase in government spending. D) an increase in consumption spending.
Which of the following is true according to the circular flow model?
A. Firms are suppliers in both the product and factor markets. B. Firms are demanders in the product markets and suppliers in the factor markets. C. Households are demanders in both the product and factor markets. D. Households are demanders in the product markets and suppliers in the factor markets. E. The government is a demander in the product market only.