What happens when network externalities are present? A. The usefulness of telecommunications equipment rises. B. The usefulness of networks diminishes with the number of consumers who enter them. C. The usefulness of a product decreases as the number of firms selling the product increases. D. The usefulness of a product increases with the number of consumers who use it. Part 2 What happens when consumption of a product is path dependent? A. The product can sell for a higher price when it is new and there are no similar products consumers can buy than when it is older and consumers can choose to buy substitutes for the product. B. The cost of switching to a product with a better technology gives the product with the initial technology an advantage. C. The consumption path that a product follows depends on the firm that uses the best technology to produce it. D. The technology used to produce the product has a specific growth path.
Added by Karen E.
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This is because the value of the product or service grows as more people adopt it, leading to a positive feedback loop. Show more…
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Network externalities are important because Choose one: (A) increasing membership increases the benefits to other members, which increases quantity demanded (B) increasing benefits imposes a negative externality on existing members (C) as the network size grows, the services become cheaper (D) their large networks inflict negative externalities on potential competitors
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1. Consumer surplus measures: A. The marginal utility of all consumers B. The total utility of all consumers minus the total expenditures of all consumers C. The total satisfaction every consumer enjoys when they purchase a good 2. Which of the following is not a determinant of demand? A. Inflation B. Expectation C. Income 3. A very cold winter resulted in an increase in demand for space heaters. This caused the equilibrium price to _____ and the equilibrium quantity to ____. A. Decrease/increase B. Decrease/ remain unchanged C. Increase/increase 4. The law of diminishing returns says: A. Total utility declines as consumption increases B. Marginal utility decreases as consumption increases C. Nothing about utility- it's about cost 5. Which of the following would cause a decrease in supply of new automobiles? A. New laws that require additional safety features in new cars B. Many new technological improvements in the production process C. A decrease in workers benefits 6. A shortage occurs when: A. Demand is very high B. There is a price ceiling below the equilibrium price C. There is a price floor above the equilibrium price
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