(Figure: Market Equilibrium for a Network Good) When P = MC, where will market equilibrium occur?

A) It will occur at point d because at point b, network effects are strong enough to continue to induce more buyers to purchase the product.
B) It will occur at point b because MC = MR at that point, so the market will stabilize when it reaches point b.
C) It can occur at either point b or point d. There are multiple equilibria associated with network goods.
D) It will occur at point c because price and profits are the highest at c.

Question

(Figure: Market Equilibrium for a Network Good) When P = MC, where will market equilibrium occur?

A) It will occur at point d because at point b, network effects are strong enough to continue to induce more buyers to purchase the product. 
B) It will occur at point b because MC = MR at that point, so the market will stabilize when it reaches point b. 
C) It can occur at either point b or point d. There are multiple equilibria associated with network goods. 
D) It will occur at point c because price and profits are the highest at c.

Quizplus · Accepted Answer

The Answer of (Figure: Market Equilibrium for a Network Good) When P = MC, where will market equilibrium occur?

A) It will occur at point d because at point b, network effects are strong enough to continue to induce more buyers to purchase the product. 
B) It will occur at point b because MC = MR at that point, so the market will stabilize when it reaches point b. 
C) It can occur at either point b or point d. There are multiple equilibria associated with network goods. 
D) It will occur at point c because price and profits are the highest at c.