Some economists argue that Microsoft become a monopoly in the market for computer software by developing MS-DOS, an operating system used for the first IBM personal computers. The more people who used MS-DOS-based programs, the greater the usefulness of
a using a computer with an MS-DOS operating system. The explanation for Microsoft's monopoly is
A) the development of new technology that other firms could not copy.
B) control of a key resource which, in this case, is the MS-DOS operating system.
C) network externalities.
D) patents Microsoft obtained when it developed the MS-DOS operating system.
Answer: C
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Assume that a firm's production process is subject to increasing returns to scale over a broad range of outputs. Long-run average costs over this output will tend to
A) increase. B) decline. C) remain constant. D) fall to a minimum and then rise.
The rapid development of Internet technologies during the 1990s allowed businesses to produce goods and services more cheaply than before and also gave rise to completely new services. We would show this change in the AD/AS model by moving the short-run aggregate:
A. supply curve up with little change in aggregate demand. B. supply curve down (to the right) with little change in aggregate demand. C. demand curve right with little change in short-run aggregate supply. D. demand curve left with little change in short-run aggregate supply.
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The local ice cream shop is trying to figure out how many workers to hire, and part of the decision will be based on the marginal product of labor. The following table shows a short-run production function for quantity of ice cream tubs produced. Diminishing marginal returns begins after hiring which worker?
a. first b. second c. third d. fourth