Question 1

(Figure: Network Market Curves) Based on the graphs, which curve represents the demand curve for a network good?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 2

If Sandy joins Match.com, then the value of membership in Match.com _____ for Joanie, who is already a member, and _____ for Robert, who is considering joining.

Accepted Answer

A)  rises; rises 
B)  rises; falls 
C)  falls; rises 
D)  falls; falls 
A)  rises; rises 
B)  rises; falls 
C)  falls; rises 
D)  falls; falls

Question 3

Describe some of the common strategies used to protect network goods from entering a vicious cycle or to increase the likelihood of entering a virtuous cycle.

Accepted Answer

Teaser strategies include attractive up-

Question 4

In the market for a network good, the private supply curve lies to the right of the social supply curve.

Accepted Answer

A) True 
 B)False

Question 5

Which statement is TRUE with regards to network goods?

Accepted Answer

A)  The market leader for a network good is always the best quality product available. 
B)  Changes in market share for network goods are usually very slow. 
C)  It is possible that a market leader for a network good can quickly descend into a vicious cycle. 
D)  Market leaders for network goods usually remain in their top spots for at least a decade. 
A)  The market leader for a network good is always the best quality product available. 
B)  Changes in market share for network goods are usually very slow. 
C)  It is possible that a market leader for a network good can quickly descend into a vicious cycle. 
D)  Market leaders for network goods usually remain in their top spots for at least a decade.

Question 6

The equilibrium point on the following network demand curve occurs at point

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 7

Inputs that are needed to produce a product or to allow a person to consume a product are known as

Accepted Answer

A)  industry standards. 
B)  essential facilities. 
C)  interconnection. 
D)  network compatibility. 
A)  industry standards. 
B)  essential facilities. 
C)  interconnection. 
D)  network compatibility.

Question 8

Achieving an industry standard for a network good generally leads to

Accepted Answer

A)  a reduction in monopoly power in the industry. 
B)  a reduction in wasteful spending on marketing. 
C)  productivity gains and greater cost reductions. 
D)  market dominance for the firm "owning" the network. 
A)  a reduction in monopoly power in the industry. 
B)  a reduction in wasteful spending on marketing. 
C)  productivity gains and greater cost reductions. 
D)  market dominance for the firm "owning" the network.

Question 9

A pricing strategy that involves differentiating a good by packaging it into multiple products for people with different needs is

Accepted Answer

A)  intertemporal pricing. 
B)  versioning. 
C)  peak-load pricing. 
D)  bundling. 
A)  intertemporal pricing. 
B)  versioning. 
C)  peak-load pricing. 
D)  bundling.

Question 10

(Figure: Understanding Network Good Markets) The graph depicts the market for a network good. Which letter represents the social demand curve?

Accepted Answer

A)  E 
B)  F 
C)  G 
D)  H 
A)  E 
B)  F 
C)  G 
D)  H

Question 11

As output increases

Accepted Answer

A)  the network effect puts downward pressure on prices while the price effect puts upward pressure on prices. 
B)  the network effect puts upward pressure on prices while the price effect puts downward pressure on prices. 
C)  both the network effect and the price effect put upward pressure on prices. 
D)  both the network effect and the price effect put downward pressure on prices. 
A)  the network effect puts downward pressure on prices while the price effect puts upward pressure on prices. 
B)  the network effect puts upward pressure on prices while the price effect puts downward pressure on prices. 
C)  both the network effect and the price effect put upward pressure on prices. 
D)  both the network effect and the price effect put downward pressure on prices.

Question 12

(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 leaving this network.

Accepted Answer

D_S and D_P sh

Question 13

Network goods differ from other types of markets studied in economics because the supply curve is different.

Accepted Answer

A) True 
 B)False

Question 14

Cable customers often purchase ESPN, whether they are sports fans or not. This is best described as an example of bundling.

Accepted Answer

A) True 
 B)False

Question 15

A network good is one with which the benefit to the user rises if there is a small number of other users of the good.

Accepted Answer

A) True 
 B)False

Question 16

Versioning is a type of intertemporal pricing.

Accepted Answer

A) True 
 B)False

Question 17

(Figure: Market Equilibrium for a Network Good) Based on the graph, product maturity occurs at point

Accepted Answer

A)  a 
B)  b 
C)  c 
D)  d 
A)  a 
B)  b 
C)  c 
D)  d

Question 18

(Figure: Market for a Network Good 2) The graph depicts the market for a network good. What point represents the tipping point?

Accepted Answer

A)  E 
B)  F 
C)  G 
D)  H 
A)  E 
B)  F 
C)  G 
D)  H

Question 19

Equilibrium for a network good is at the intersection of the downward-sloping portion of the network demand curve and the marginal cost curve.

Accepted Answer

A) True 
 B)False

Question 20

(Figure: Peak-Load Pricing Model) The graph represents the market for a good that follows a peak-load pricing model. Which curve represents demand during a nonpeak period?

Accepted Answer

A)  M 
B)  N 
C)  O 
D)  S 
A)  M 
B)  N 
C)  O 
D)  S

(Figure: Network Market Curves) Based on the graphs, which curve represents the demand curve for a network good?

If Sandy joins Match.com, then the value of membership in Match.com _ for Joanie, who is already a member, and _ for Robert, who is considering joining.

Describe some of the common strategies used to protect network goods from entering a vicious cycle or to increase the likelihood of entering a virtuous cycle.

In the market for a network good, the private supply curve lies to the right of the social supply curve.

Which statement is TRUE with regards to network goods?

The equilibrium point on the following network demand curve occurs at point

Inputs that are needed to produce a product or to allow a person to consume a product are known as

Achieving an industry standard for a network good generally leads to

A pricing strategy that involves differentiating a good by packaging it into multiple products for people with different needs is

(Figure: Understanding Network Good Markets) The graph depicts the market for a network good. Which letter represents the social demand curve?

As output increases

(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 leaving this network.

Network goods differ from other types of markets studied in economics because the supply curve is different.

Cable customers often purchase ESPN, whether they are sports fans or not. This is best described as an example of bundling.

A network good is one with which the benefit to the user rises if there is a small number of other users of the good.

Versioning is a type of intertemporal pricing.

(Figure: Market Equilibrium for a Network Good) Based on the graph, product maturity occurs at point

(Figure: Market for a Network Good 2) The graph depicts the market for a network good. What point represents the tipping point?

Equilibrium for a network good is at the intersection of the downward-sloping portion of the network demand curve and the marginal cost curve.

(Figure: Peak-Load Pricing Model) The graph represents the market for a good that follows a peak-load pricing model. Which curve represents demand during a nonpeak period?

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

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Exam 14: Network Goods

(Figure: Network Market Curves) Based on the graphs, which curve represents the demand curve for a network good?

If Sandy joins Match.com, then the value of membership in Match.com _____ for Joanie, who is already a member, and _____ for Robert, who is considering joining.

Describe some of the common strategies used to protect network goods from entering a vicious cycle or to increase the likelihood of entering a virtuous cycle.

In the market for a network good, the private supply curve lies to the right of the social supply curve.

Which statement is TRUE with regards to network goods?

The equilibrium point on the following network demand curve occurs at point

Inputs that are needed to produce a product or to allow a person to consume a product are known as

Achieving an industry standard for a network good generally leads to

A pricing strategy that involves differentiating a good by packaging it into multiple products for people with different needs is

(Figure: Understanding Network Good Markets) The graph depicts the market for a network good. Which letter represents the social demand curve?

As output increases

(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 leaving this network.

Network goods differ from other types of markets studied in economics because the supply curve is different.

Cable customers often purchase ESPN, whether they are sports fans or not. This is best described as an example of bundling.

A network good is one with which the benefit to the user rises if there is a small number of other users of the good.

Versioning is a type of intertemporal pricing.

(Figure: Market Equilibrium for a Network Good) Based on the graph, product maturity occurs at point

(Figure: Market for a Network Good 2) The graph depicts the market for a network good. What point represents the tipping point?

Equilibrium for a network good is at the intersection of the downward-sloping portion of the network demand curve and the marginal cost curve.

(Figure: Peak-Load Pricing Model) The graph represents the market for a good that follows a peak-load pricing model. Which curve represents demand during a nonpeak period?

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

If Sandy joins Match.com, then the value of membership in Match.com _ for Joanie, who is already a member, and _ for Robert, who is considering joining.