Network effects occur when the value of a platform to its users changes as the number of users rises.
Answer the following statement true (T) or false (F)
True
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Compared to an economy’s self-correcting mechanism, active contractionary fiscal policy will
A. work more slowly and calmly. B. work more quickly. C. have less deflationary effects. D. have a smaller effect on real GDP.
If the production of a good created both external costs and external benefits, but the external costs were greater, without government intervention, a market economy will:
a. not produce the product at all b. overproduce the product. c. underproduce the product. d. produce the optimal amount of the product.
Suppose that the federal government grants a 50 cent per gallon subsidy to buyers of gasoline and that the demand for gasoline is highly inelastic while the supply is highly elastic. Under these circumstances, the benefit of the subsidy
a. will go primarily to producers. b. will go primarily to consumers. c. will be split equally between consumers and producers. d. cannot be determined because the actual benefit of a subsidy is not influenced by the elasticities of supply and demand.
When a country allows trade and becomes an exporter of a good,
a. domestic producers become better off, and domestic consumers become worse off. b. domestic producers become worse off, and domestic consumers become better off. c. domestic producers become better off, but the effect on the well-being of domestic consumers is ambiguous. d. domestic consumers become worse off, but the effect on the well-being of domestic producers is ambiguous.