Network externalities
A) can only exist when there are economies of scale.
B) prevent the dominance of a market by one firm.
C) exist when the usefulness of a product increases with the number of consumers who use it.
D) are created when celebrity endorsements of products lead to a surge in the demand for those products.
Answer: C
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To keep employees from shirking, you can invest in greater monitoring
a. even though monitoring is expensive b. especially when monitoring is not very efficient c. when employees fail to respond to incentive contracts d. when incentives solve both moral hazard and adverse selection problems with employees
A deficit in the financial account means:
a) the nation has imported more assets than it exported b) the nation has exported more assets than it imported c) the nation has invested more than it saved d) the nation has produced more than it consumed
Keynes thought that the major economic reason for the Great Depression was
A. the existence of labor unions. B. a lack of investment due to poor profit expectations. C. the existence of monopolies. D. high interest rates.
Answer the following statements true (T) or false (F)
1. Macroeconomics is concerned with the study of the nation-wide market for specific goods like oranges. 2. The comment that "taxes must be reduced for the good of the economy" is an example of a normative economic statement. 3. "The role of government in the economy should be kept to a minimum" is an example of a positive economic statement. 4. The economizing problem for individuals arises from the conflict between having relatively unlimited time and relatively limited jobs to do.