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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A movement along the demand curve for a good can be attributed to a change in
a.the substitution effect of consuming a good
b.the demand for a good
c.the opportunity cost of producing a good.
d.the quantity demanded of a good
In the European Monetary Union, the supply of euros
A) is managed by the individual central banks of the member countries. B) is managed by the European Central Bank. C) is determined by market forces. D) automatically varied in response to short-run fluctuations in the exchange rates of the member nations.
Cooperation:
B. is sustained by the promise of punishment for good behavior. C. can be established even if threats/promises are not credible. D. All of these are true about cooperation.
Jen has a PhD in economics and has been working for 3 years part-time as an instructor; she has always hoped to be hired as a full-time faculty member. The best way to describe Jen is to say she is:
A. a discouraged worker. B. unemployed. C. underemployed. D. overemployed.