How does a natural monopoly differ from a firm that becomes a monopoly due to network effects?

What will be an ideal response?


Natural monopolies arise because of economies of scale—the firm's ATC curve decreases over the relevant range of output. Network effects arise from the benefits conferred on consumers, and does not affect costs or economies of scale, which are related to the firm. There are some goods that feature both economies of scale and network effects, such as operating system software and telephone networks.

Economics

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Trade, whether between individuals or nations, will not take place unless

A. there is one commodity and one currency. B. at least one participant expects to gain from the trade. C. both participants expect to gain from the trade. D. each side has an absolute advantage.

Economics

John earned a PhD in biomedical engineering, and works full-time as a faculty member at the local university. He also does some private consulting work on the side. He would like to give up teaching and do consulting full-time, but he fears there isn't enough demand for it. The best way to describe John is to say he is:

A. a discouraged worker. B. overemployed. C. underemployed. D. employed.

Economics

A strength of the market economy is that:

A. it results in an equal distribution of wealth. B. resources are used efficiently. C. planners rather than consumers determine answers to the basic economic questions. D. information for production and distribution decisions passes directly from the government to buyers.

Economics

A college graduate in 1972 found a job paying $7,200. The CPI was 0.418 in 1972. A college graduate in 2005 found a job paying $28,000. The CPI was 1.68 in 2005. The 1972 graduate's job paid ________ in nominal terms and ________ in real terms than the 2005 graduate's job.

A. less, less B. more; less C. less; more D. more; more

Economics