A Natural Monopoly Is Most Likely to Occur in Which

question 102

Multiple Choice

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 Therapeutic Goods Administration can take more than 10 years.
• B) The diamond mining and marketing industry because one firm can control a key resource.
• C) The software industry because of the importance of network externalities.
• D) An industry where fixed costs are very large relative to variable costs.

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Definitions:

Current Liabilities

Obligations or debts that a company needs to pay within one year.

Bond Carrying Value

The net amount at which a bond is reported on the balance sheet, calculated as the face value of the bond minus any unamortized discounts or plus any unamortized premiums.

Sold At A Discount

Refers to selling a product or service below its usual price or the issuing of bonds below their face value.

Bond Carrying Amount

The net value of a bond recorded on the issuer's balance sheet, which can differ from its face value due to amortization of any discounts or premiums and issuance costs.