Deck 1: Externalities, Network Effects, and Monopolies

Question 1

Which of the following is NOT an issue involving network externalities?

A)the market may be too small
B)the market may be to
C)problem of monopol
D)None of the above

Answer 1

the market may be to

Question 2

Which of the following is a general policy issue surrounding the issue of network externalities?

A)Issues of private property rights and intellectual property issues
B)Issues of monopoly re
C)None of the Above
D)Both A & B

Answer 2

Both A & B

Question 3

Which one of the following goods is nonexcludable?

A)the Sunshine
B)a Cab
C)an art gallary
D)a toll bridge

Answer 3

the Sunshine

Question 4

Network effects also known as -------------

A)Network goods
B)Network Management
C)Network Externalities
D)Network Diagnosis

Question 5

Network industries does not include ----------------

A)Telephone
B)Airlines
C)Banking
D)Treasury Bonds

Question 6

The second theorem of _ states that any Pareto optimum can be supported as a competitive equilibrium for some initial set of endowments.

A)Public Choice
B)Social Interest
C)Welfare Economics
D)Keynesian Economi

Question 7

Economies of scale result from                          

A)large fixed costs and/or weakly increasing variable costs
B)low fixed costs and/or strongly decreasing variable costs
C)large fixed costs and decreasing variable costs
D)low fixed costs and weakly increasing variable costs

Question 8

---------------------network effects arise when there are "at least two different customer groups that are interdependent, and the utility of at least one group grows as the other group(s) grow".

A)Direct
B)Indirect (or cross-group)
C)Two-sided
D)Local

Question 9

Network scales faster as it --------------

A)lowers its customer acquistion cost.
B)higher its customer ac
C)cost of acquisition remains constant.

Question 10

Which of the following started as a De facto standard?

A)ISO
B)HTTP
C)IEEE
D)ANSI

Question 11

Which of the following is true of a natural monopoly?

A)The firm can supply the entire market at a lower cost than could two or more firms.
B)Its average total cost curve slopes upward as it intersects the demand curve.
C)The firm is not protected by any barrier to entry.
D)Economies of scale exist to only a very low level of output.

Question 12

When consumers are not identical, a market failure may occur when

A)a monopoly producer provides compatibility.
B)a monopoly producer does not provide compatibility and compatibility is not socially preferred.
C)a monopoly provides compatibility and compatibility is socially preferred.
D)a monopoly producer does not provide compatibility but compatibility is socially preferred to incompatibility.

Question 13

When users' preferences exhibit network externalities, and if computer brands are differentiated and incompatible, then ----------------

A)prices and profit levels decline with an increase in consumers' preference toward the network size.
B)prices and profit levels increases with an increase in consumers' preference towards the network size.
C)price increases and profit level decreases with an increase in consumers' preference toward the network size.
D)price declines while profit level increase with an increase in consumers' preference towards the network size.

Question 14

When users' preferences exhibit network externalities,                                

A)computer producers charge higher prices and earn higher profits when they make their machines compatible;
B)consumers are worse off when firms sell compatible machines.
C)consumers are well off when firms sell compatible machines
D)Both A & B

Question 15

In Duopoly, Social welfare is maximized when ----------------------

A)there is one-way compatibility.
B)both machines are compatible.
C)both machines are incompatible to each other.
D)none of the above.

Question 16

Production of software exhibits sharp ------------------

A)economies of scope
B)economic welfare
C)economic sustainabil
D)economies of scale