EBK MICROECONOMICS
2nd Edition
ISBN: 9780134524931
Author: List
Publisher: YUZU
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Question
Chapter 12, Problem 3Q
To determine
The meaning for a good when it generates network externalities.
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A network effect, or network externality, exists when: Group of answer choices a firm
’
s average total cost rises continuously over the entire ran the customers of one business overlap with those of another competing business. the costs of resources for an industry rises as the number of sellers in an industry expands. the value of a product or service to each consumer increases as the number of users expands.
In markets with strong network externalities:
a.
It is common for the market to be split equally across several firms.
b.
Market shares typically fluctuate in opposite directions, i.e. high market share today implies lower market share tomorrow.
c.
Market entry happens frequently.
d.
A single firm tends to dominate the market.
Consider the monopoly platform model we studied in the lecture where both sides exert positive network effects on the other side. Is the following claim true? When the platform charges either transaction fees or access fees, strictly more sellers join the platform if strictly more buyers join the platform.
Select one:
True
False
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