What is a network externality?
What will be an ideal response?
It is when the value of a good to a consumer increases with the number of other consumers using the good.
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Refer to Figure 4-3. What area represents consumer surplus at the equilibrium price of P1?
A) A + B + C + D + E B) A + B + C C) D + E D) A
What is the meaning of the statement "correlation does not mean causation"?
What will be an ideal response?
An economic survey observed that a 20 percent cut in the price of a certain line of women's clothing, almost doubled the quantity demanded of the clothing. This led economists to conclude that the demand for this line of clothing is _____
a. highly elastic b. highly inelastic c. unit-elastic d. perfectly elastic e. perfectly inelastic
Debt service is the percent of:
A. GDP that is owed in debt. B. the total value of household debt that consumers pay in interest. C. the total value of household debt that banks pay to create the loans. D. disposable income consumers have to pay for their debts.