Why is oligopoly likely to be present in industries that see significant positive network effects?
What will be an ideal response?
A positive network externality occurs when a consumer’s quantity demanded for a
good or service increases because a greater number of consumers purchase the same
good or service. The bandwagon effect is one such example. Consumers tend to
choose the products that everyone else is using. Oligopolists can capitalize on this
phenomenon through their marketing and advertising campaigns. With only a few large
firms dominating an oligopoly market, consumers are likely to develop strong brand
loyalty. This makes it difficult for them to be lured away by any newcomers able to
surmount the extensive barriers to entry to the industry. In addition, consumers that
have joined a larger network through positive network externalities may be reluctant to
leave due to switching costs. Positive network externalities and switching costs benefit
the earliest firms in a market, in this case oligopolistic firms, and help them dominate the
market.
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What most accurately describes the U.S. compared to other nations in the early 1900s?
a. The U.S., which was still quite young, was one of the least productive nations in the world in both the agricultural and manufacturing sectors. b. The U.S., Great Britain and Germany were the three most industrialized nations. c. The industrial output in the U.S. was about average compared the rest of the nations in the world. d. The U.S., which had large supplies of land, had a highly productive agricultural sector, but its industrial productivity was quite low relative to that of other nations.
Explain why a monopsonist's marginal factor cost curve must lie above its labor supply curve
Answer the following questions true (T) or false (F)
1. Examining the conditions that could lead to inflation in an economy is an example of a microeconomic topic. 2. Suppose that to move more people off the wait list for organ donations, surgeons and hospitals are developing a market for organ swapping. This is an example of a macroeconomic topic. 3. Examining the conditions that could lead to economic growth is an example of a macroeconomic topic.