When network effects are important, then an industry can experience

The adaptive expectations hypothesis implies that people

a. adjust their expectations quickly to policy changes. b. expect the next period to be pretty much like the recent past. c. will always be correct in their forecast for the next period. d. change their expectations about the future if policy changes.

An example of a(n) ________ comparative advantage is that some U.S. consumers prefer German beer over American beer because German beer has a reputation for tasting better.

A. unwarranted B. acquired C. subsidized D. natural