Why do economies of scale and monopoly power exist with network goods?
A. Many small firms must develop to serve all of the consumers willing to pay for access to the network good, so their costs are driven down.
B. Network goods require a group of sellers working together and this cooperation reduces the firms' cost per unit.
C. Just as the value of a network good decreases to each user as the total number of users increases, so does the long run average cost decrease as output increases.
D. As the number of people connected to a network increases, the greater the benefits each person gets and the smaller the cost per unit to supply.
Answer: D
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A strategy in which a player uses probabilities to decide which strategy to use is called a
A) pure strategy. B) mixed strategy. C) Pareto strategy. D) coin flip strategy.
In a repeated game, cooperation can be enforced by the use of a trigger strategy that
A) leads to a higher payoff of the cheated upon player. B) reduces the payoff of the player that reneged the agreement. C) rewards the player that reneged the agreement. D) is a dominant strategy.