Exam 14: Network Goods

In network industries where monopolies can be created, deadweight loss can be reduced if there is less interconnection.

A cell phone service allows unlimited text messaging between its customers and any 10 persons of the customer's choice, but it charges a flat fee per 100 messages between its customers and others beyond the 10 initial persons. What type of network is this?

Which of these is not a common regulatory action taken in a market for network goods?

In network industries in which monopolies can be created if network effects are strong, interconnection increases competition and decreases deadweight loss.

Occasionally, gyms waive their membership fees in the hope of attracting new customers. This is BEST described as an example of

In network industries in which monopolies can be created if network effects are strong, interconnection _____ competition and _____ deadweight loss.

Which of these is NOT a network good?

As a network expands, the vertical supply curve shifts to the right, and the corresponding demand curve decreases.

When a new gym opens up in town with the capacity of serving 500 new members, the supply curve for this network would be

Core users of a network good are more sensitive to price than casual users.

Network demand curves

A pricing strategy that involves pricing a product higher during periods of higher demand and lower during periods of lower demand is known as

When a virtuous cycle is impacting the market for a network good

The tipping point is the quantity from which network externalities are strong enough to continue building the network.

The train wheel gauge (the distance between rails on a train track) is different in Mongolia than in Russia. When a train travels from one country into the other, the wheels on each train car must be changed at the border to allow the train to fit onto the track across the border in the other country. The train gauge differences across countries indicate that for train tracks, there is no global

(Figure: Network Goods and Fixed Capacities) The graph represents a small network with a fixed capacity. If capacity decreases from S₁ to S₀, D rotates downward, and price decreases.

(Figure: Market for a Network Good 2) The graph depicts a market for a network good. If demand falls to the left of point F, the company will gain market share.

Casual users of a network good purchase the good after core users do.

A network effect generally pushing prices _____ as the network expands, and the price effect generally pushes prices _____ as the network expands.

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