A network effect arises whenever
A) firms in an oligopolistic industry engage in limit pricing.
B) firms in an oligopolistic industry engage in a zero-sum game.
C) a consumer's willingness to purchase a good or service is influenced by how many others also buy or have bought the item.
D) a producer's willingness to produce a good or service is influenced by how many other firms also produce or have produced the item.
Answer: C
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Which of the following correctly identifies a problem with price regulation?
A) It minimizes social surplus. B) It minimizes consumer surplus. C) Sellers do not have an incentive to cut costs. D) Government intervention increases deadweight loss.
Because central banks have not been willing to give up their option of intervening in the foreign exchange market, the current international financial system can best be described as a
A) variable-pegged exchange rate system. B) moving-pegged exchange rate system. C) hybrid of a fixed exchange rate and flexible exchange rate system. D) flexible-exchange, dollar-pegged exchange rate system.
Corey is having difficulty deciding between two dishwashers, A and B. As shown in the accompanying diagram, A makes more noise than B, but is cheaper. Ideally, Corey would like a dishwasher that is both quiet and inexpensive.
If Corey behaves like most decision-makers, then the addition of option C would:
A. increase his likelihood of picking B. B. decrease his likelihood of buying a dishwasher. C. increase his likelihood of picking A. D. have no impact on his choice of A and B.
Goods and services provided by state and local governments are:
A. included in GDP at cost. B. excluded from GDP because they are not sold in markets. C. included in GDP at market prices. D. excluded from GDP because they are publicly provided.