Explain the concept of network externalities
What will be an ideal response?
A network externality is a situation in which the usefulness of a product increases with the number of consumers who use it.
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Refer to Figure 10-6. The loanable funds market is given in the figure above. If the current real interest rate is 5 percent, which of the following is true?
A) The quantity of loanable funds being demanded in the market is less than $90 million. B) The loanable funds market is in equilibrium. C) There is a surplus of loanable funds in the market. D) There is a shortage of loanable funds in the market.
Based on our understanding of the model presented in chapter 11, which of the following will cause a permanent increase in growth?
A) an increase in education spending B) an increase in the saving rate C) an increase in capital accumulation D) all of the above E) none of the above