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.
B
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Suppose that the money prices of raw materials increase so that short-run aggregate supply decreases. If the Federal Reserve does not respond, the higher money price of raw materials will
i. repeatedly shift the aggregate demand curve rightward and raise the price level. ii. shift the aggregate demand curve rightward and the aggregate supply curve leftward, raising prices. iii. result initially in lower employment and a higher price level. A) i only B) both i and ii C) iii only D) both ii and iii E) i and iii
Which of the following is a common method used by government to cope with the situation in which production of a good creates an external cost?
A) removing property rights B) subsidizing production C) marketable permits D) lottery E) vouchers