How does a network externality serve as a barrier to entry? Is this barrier surmountable? Explain
What will be an ideal response?
A network externality exists where the usefulness of the product increases with the number of people who use it. It can serve as an entry barrier because the popularity of the product attracts more and more consumers, thereby increasing the supplier's dominance in the market. However, this barrier is not insurmountable. If a rival enters the market with a superior product, then it is possible that customers will switch to the superior product.
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If international trade is restricted by the government of a country:
a. the domestic consumers are benefited. b. the domestic producers are adversely affected. c. the domestic consumers pay higher prices for imported goods. d. the resources are equally distributed among domestic and foreign producers. e. the resources are allocated to their highest paid uses.
The BLS has recently made explicit adjustments in its CPI calculations to control for
A. food safety quality issues. B. purchase location adjustments. C. issues relating to the frequency of market basket updates. D. substitution between goods.
What is the typical relationship among interest rates on three-month Treasury bills, long-term Treasury bonds, and Baa corporate bonds?
What will be an ideal response?
An economy has two workers, Paula and Ricardo. Everyday they work, Paula can produce 4 computers or 16 shirts, and Ricardo can produce 6 computers or 12 shirts. What is the opportunity cost for Paula to produce one computer?
A. ½ shirt B. 1 shirt C. 4 shirts D. ¼ shirt