A network externality occurs when
A) there is production cost savings from being networked with suppliers.
B) there is production cost savings from being networked with buyers.
C) the usefulness of a good is affected by how many other people use the good.
D) the usefulness of a good is affected by celebrities who use the good.
Answer: C
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Equilibrium output is reduced by an increase in
A) planned investment. B) taxes. C) government spending. D) net exports.
Alan Krueger conducted a survey of fans at the 2001 Super Bowl who purchased tickets to the game for $325 or $400. Krueger found that (a) 94 percent of those surveyed would not have paid $3,000 for their tickets, and (b) 92 percent of those surveyed
would not have sold their tickets for $3,000. These results are an example of A) the tendency of people to be unwilling to sell a good they already own even if they are offered a price that is greater than the price they would be willing to pay if they did not already own it. B) the tendency for consumers to account for monetary costs but to ignore sunk costs. C) consumers placing a high value on a product because it makes them appear to be fashionable. D) the law of demand.
The average expected rate of return of a financial asset equals:
A. the rate that compensates for time preference plus the rate that compensates for risk. B. the rate that compensates for time preference plus the rate of inflation. C. beta plus the rate that compensates for risk. D. the risk-free interest rate plus the rate of inflation.
Explain what the slope of the income consumption curve shows about the income elasticity of demand
What will be an ideal response?