A network externality is:
A. a direct effect on an economic decision maker.
B. an indirect effect on an economic decision maker.
C. the effect that an additional user of a good or participant in an activity has on the value of that good or activity for others.
D. an uncompensated effect on someone other than the person who caused it.
C. the effect that an additional user of a good or participant in an activity has on the value of that good or activity for others.
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Given the demand curve in Figure 5-24, explain how consumer’s surplus is calculated.
What will be an ideal response?
Dell and Gateway must decide whether to lower their prices, based on the potential economic profits shown in the payoff matrix above. (The profits are in millions of dollars). In the Nash equilibrium
A) Dell keeps its prices high and Gateway lowers its prices. B) both Dell and Gateway lower prices. C) Gateway keeps its prices high and Dell lowers its prices. D) both Dell and Gateway keep prices high.
After firm A acquired firm B, it raised the prices for the goods produced by both firms. This can increase profits if those goods are
a. Substitutes b. Complements c. Not related d. None of the above
Exhibit 21-1 Production possibilities curves
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In Exhibit 21-1, the production possibilities curves of wheat and corn for Nabia and Pada are presented. Suppose Nabia produces at point A on its PPC. How many units of wheat is the country able to produce?
A. 15. B. 60. C. 40. D. 20.