A network effect exists whenever
A) a firm's willingness to produce a particular good or service is influenced by the costs of inputs it must utilize in order to manufacture the item.
B) a consumer?s willingness to purchase a particular good or service is influenced by how many others also buy or have bought the item.
C) a firm's willingness to purchase a particular factor of production depends on the other types of inputs it utilizes to manufacture an item.
D) a consumer's willingness to purchase a particular good or service is influenced by the prices of other complementary or substitute items.
Answer: B
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Suppose a tax is imposed on sellers. The more inelastic the demand for the taxed item, the
A) greater the share of the tax paid by sellers. B) smaller the deadweight loss from the tax. C) larger the decrease in consumption because of the tax. D) All of the above answers are correct.
Using average cost pricing to regulate a natural monopoly creates a deadweight loss
Indicate whether the statement is true or false