Laser disc players have been around for 10 years, but in the last several years, the sales have skyrocketed
Manufacturers attribute the increase in sales to lower prices, increased availability of movies on laser disk, and the appearance of laser disks for rent in video cassette rental stores. Describe this market using the concept of network externalities.
There is a strong positive network externality at work in the laser disk player market. Laser disk players can only play movies that are prerecorded on disks. As more movies become available, and as disk rental has become a reality, more people are buying the laser disk players.
The sales of laser disk players has also been aided by lower prices, but the effect of the lower prices is not a positive network externality.
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Suppose two neighbors share a park. One neighbor, Al, leaves trash in the park. This bothers the other neighbor, Bert. According to Coase's theorem, one necessary condition to alleviate the externality is that
A) Al is fined by the government. B) Al has the right to leave trash and Bert cannot do anything about it. C) Bert has the right to a clean park and Al cannot leave trash. D) Either Al or Bert owns the park.
What was the least important reason for the failure of the Virginia Company?
a. Difficulty in finding good crops to grow b. The Company's employees had unforeseen labor alternatives. c. There was a relatively small incentive for employees to work hard. d. The death rate was much higher than they expected.
Formation of trade blocs can be considered beneficial because it
A. diverts world trade from low-cost producers to high-cost producers by encouraging too much trade within blocs. B. causes international friction when certain countries are let in the bloc and others are left out. C. encourages purchases from higher-cost producers. D. encourages increased total trade by each member country.
The Federal Reserve System performs many functions, but its most important one is:
A. controlling the money supply. B. supervision of commercial banks. C. issuing currency. D. lending money to banks and thrifts.