Exam 14: Network Goods

One type of market segmentation is called versioning.

When a consumer joins a network, the external cost generated shifts demand leftward.

When a consumer joins a network, the value of the network to existing users _____, and the value to potential users _____.

(Figure: Network Market Curves) Based on the graphs, the curve marked C represents the demand curve for a network good.

(Figure: Externalities and Network Effects) Based on the graph, we see that if a consumer leaves the social network depicted

In the wireless industry, your smartphone device is an example of an

As more people rely on a travel app to book reservations, the quality of the app improves, encouraging more people to use the app. This type of network is best described as a(n) _____ network.

In the market for a network good, the private

Home Internet service is often sold with a free wireless modem if a customer signs a 12-month contract. This is best described as an example of intertemporal pricing.

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

Network goods often have high variable costs.

The physical linking of one network to another network's essential facilities is called

What is the shape of the short-run supply curve for a network good?

Why do firms engage in versioning when the costs of production differ little for different versions of the product?

In the long run, interconnection in network industries creates a _____ environment that leads firms to _____.

Use the concepts of core and casual users to explain the shape of the network demand curve.

Cable customers often have to purchase ESPN, regardless of whether they are sports fans. This is BEST described as an example of

Switching costs include monetary and non-monetary costs of switching from one good to another.

(Figure: Externalities and Network Effects) The graph depicts the market for a network good. Describe the effects, including shifts in supply and/or demand and changes in quantity, of a consumer joining this network.

In the long run, interconnection creates a less competitive environment that leads firms to raise prices.