Question 1

Which of these has gained market share because of a virtuous cycle?

Accepted Answer

A)  calling cards 
B)  Apple Watch 
C)  prepaid phones 
D)  video game rentals 
A)  calling cards 
B)  Apple Watch 
C)  prepaid phones 
D)  video game rentals

Question 2

The Fort Worth New Mom's Club is an example of a _____ network.

Accepted Answer

A)  physical 
B)  mental 
C)  social 
D)  virtual 
A)  physical 
B)  mental 
C)  social 
D)  virtual

Question 3

If demand for a network good falls to the left of the tipping point, then it will lead to a virtuous cycle.

Accepted Answer

A) True 
 B)False

Question 4

Firms that provide network goods often become monopolies.

Accepted Answer

A) True 
 B)False

Question 5

What is a network? Briefly describe the three kinds of networks.

Accepted Answer

A network is a type of structure that co

Question 6

Network goods _____ and _____.

Accepted Answer

A)  are usually provided by a single firm; can be competitive 
B)  are usually provided by a single firm; do not allow for competition 
C)  can be provided by multiple firms; can be competitive 
A)  are usually provided by a single firm; can be competitive 
B)  are usually provided by a single firm; do not allow for competition 
C)  can be provided by multiple firms; can be competitive

Question 7

The market equilibrium for a network good generally occurs before most network externalities are realized.

Accepted Answer

A) True 
 B)False

Question 8

Why is the short-run supply curve for a network good vertical?

Accepted Answer

A)  It is limited to the capacity of the firm's fixed investment. 
B)  It is limited to the capacity of the firm's variable costs. 
C)  It is limited to the capacity of the firm's consumer demand. 
D)  It is limited to the capacity of the firm's pricing structure. 
A)  It is limited to the capacity of the firm's fixed investment. 
B)  It is limited to the capacity of the firm's variable costs. 
C)  It is limited to the capacity of the firm's consumer demand. 
D)  It is limited to the capacity of the firm's pricing structure.

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

In the upward-sloping segment of a network demand curve, the price effect exceeds the network effect.

Accepted Answer

A) True 
 B)False

Question 11

Firms that want to retain existing customers are likely to employ

Accepted Answer

A)  teaser strategies. 
B)  versioning. 
C)  lock-in strategies. 
D)  bundling. 
A)  teaser strategies. 
B)  versioning. 
C)  lock-in strategies. 
D)  bundling.

Question 12

Your grandma finally buys an iPad only after being convinced of the benefits of using it to communicate with the rest of her family, who already have iPads. Her demand for an iPad would be represented

Accepted Answer

A)  on the upward-sloping portion of the network demand curve. 
B)  on the downward-sloping portion of the network demand curve. 
C)  at the peak of the network demand curve. 
D)  nowhere on the network demand curve because it doesn't apply to her. 
A)  on the upward-sloping portion of the network demand curve. 
B)  on the downward-sloping portion of the network demand curve. 
C)  at the peak of the network demand curve. 
D)  nowhere on the network demand curve because it doesn't apply to her.

Question 13

Evan and his friends camp out at Best Buy every time a new version of the Call of Duty multiplayer video game is released so that they can be among the first to buy it. Evan and his friends are _____ users.

Accepted Answer

A)  essential 
B)  core 
C)  fundamental 
D)  casual 
A)  essential 
B)  core 
C)  fundamental 
D)  casual

Question 14

Airlines often offer "points," which are earned by flying on a particular airline and can be used for various rewards. This is an example of a lock-in strategy.

Accepted Answer

A) True 
 B)False

Question 15

An example of a lock-in strategy is when Way-To-Go-Wireless offers a free phone to new customers who purchase its two-year wireless plan.

Accepted Answer

A) True 
 B)False

Question 16

Facebook is a _____ network.

Accepted Answer

A)  physical 
B)  mental 
C)  social 
D)  virtual 
A)  physical 
B)  mental 
C)  social 
D)  virtual

Question 17

Network goods often have _____ costs and _____ costs.

Accepted Answer

A)  low fixed; low marginal 
B)  low fixed; high marginal 
C)  high variable; high marginal 
D)  low variable; low marginal 
A)  low fixed; low marginal 
B)  low fixed; high marginal 
C)  high variable; high marginal 
D)  low variable; low marginal

Question 18

A network demand curve slopes ____ at lower quantities and _____ at higher quantities.

Accepted Answer

A)  downward; downward 
B)  downward; upward 
C)  upward; downward 
D)  upward; upward 
A)  downward; downward 
B)  downward; upward 
C)  upward; downward 
D)  upward; upward

Question 19

One example of versioning is when telecommunication customers are given discounts for purchasing home telephone service, Internet connectivity, and cell-phone service simultaneously.

Accepted Answer

A) True 
 B)False

Question 20

The network demand curve has an upward-sloping segment representing _____ and a downward-sloping segment representing _____ price sensitive.

Accepted Answer

A)  casual users who are less price sensitive; core users who are more 
B)  casual users who are more quantity sensitive; core users who are more 
C)  core users who are more price sensitive; core users who are less 
D)  core users who are less price sensitive; casual users who are more 
A)  casual users who are less price sensitive; core users who are more 
B)  casual users who are more quantity sensitive; core users who are more 
C)  core users who are more price sensitive; core users who are less 
D)  core users who are less price sensitive; casual users who are more

Which of these has gained market share because of a virtuous cycle?

The Fort Worth New Mom's Club is an example of a _____ network.

If demand for a network good falls to the left of the tipping point, then it will lead to a virtuous cycle.

Firms that provide network goods often become monopolies.

What is a network? Briefly describe the three kinds of networks.

Network goods _ and _.

The market equilibrium for a network good generally occurs before most network externalities are realized.

Why is the short-run supply curve for a network good vertical?

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

In the upward-sloping segment of a network demand curve, the price effect exceeds the network effect.

Firms that want to retain existing customers are likely to employ

Your grandma finally buys an iPad only after being convinced of the benefits of using it to communicate with the rest of her family, who already have iPads. Her demand for an iPad would be represented

Evan and his friends camp out at Best Buy every time a new version of the Call of Duty multiplayer video game is released so that they can be among the first to buy it. Evan and his friends are _____ users.

Airlines often offer "points," which are earned by flying on a particular airline and can be used for various rewards. This is an example of a lock-in strategy.

An example of a lock-in strategy is when Way-To-Go-Wireless offers a free phone to new customers who purchase its two-year wireless plan.

Facebook is a _____ network.

Network goods often have _ costs and _ costs.

A network demand curve slopes at lower quantities and _ at higher quantities.

One example of versioning is when telecommunication customers are given discounts for purchasing home telephone service, Internet connectivity, and cell-phone service simultaneously.

The network demand curve has an upward-sloping segment representing _ and a downward-sloping segment representing _ price sensitive.

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Elasticity

Consumer Choice and Demand

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, Oligopoly, and Game Theory

The Labor Market

Land, Capital Markets, and Innovation

Externalities and Public Goods

Poverty and Income Distribution

International Trade

Filters

Exam 14: Network Goods

Which of these has gained market share because of a virtuous cycle?

The Fort Worth New Mom's Club is an example of a _____ network.

If demand for a network good falls to the left of the tipping point, then it will lead to a virtuous cycle.

Firms that provide network goods often become monopolies.

What is a network? Briefly describe the three kinds of networks.

Network goods _____ and _____.

The market equilibrium for a network good generally occurs before most network externalities are realized.

Why is the short-run supply curve for a network good vertical?

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

In the upward-sloping segment of a network demand curve, the price effect exceeds the network effect.

Firms that want to retain existing customers are likely to employ

Your grandma finally buys an iPad only after being convinced of the benefits of using it to communicate with the rest of her family, who already have iPads. Her demand for an iPad would be represented

Evan and his friends camp out at Best Buy every time a new version of the Call of Duty multiplayer video game is released so that they can be among the first to buy it. Evan and his friends are _____ users.

Airlines often offer "points," which are earned by flying on a particular airline and can be used for various rewards. This is an example of a lock-in strategy.

An example of a lock-in strategy is when Way-To-Go-Wireless offers a free phone to new customers who purchase its two-year wireless plan.

Facebook is a _____ network.

Network goods often have _____ costs and _____ costs.

A network demand curve slopes ____ at lower quantities and _____ at higher quantities.

One example of versioning is when telecommunication customers are given discounts for purchasing home telephone service, Internet connectivity, and cell-phone service simultaneously.

The network demand curve has an upward-sloping segment representing _____ and a downward-sloping segment representing _____ price sensitive.

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Elasticity

Consumer Choice and Demand

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, Oligopoly, and Game Theory

The Labor Market

Land, Capital Markets, and Innovation

Externalities and Public Goods

Poverty and Income Distribution

International Trade

Filters

Network goods _ and _.

Network goods often have _ costs and _ costs.

A network demand curve slopes at lower quantities and _ at higher quantities.

The network demand curve has an upward-sloping segment representing _ and a downward-sloping segment representing _ price sensitive.