Feature of markets for network goods

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1. The optimal price for a monopolist facing different demand curves in two separate markets will be

A) higher in the market with more elastic demand.

B) higher in the market with less elastic demand.

C) the same in both markets.

D) equal to marginal cost in each markets.

2. Which of the following statements is TRUE regarding network goods?

A) producers of network goods typically sell their product at a price below marginal cost.

B) competition among companies producing network goods drives the price down to equal marginal cost.

C) network goods typically sell at a price higher than marginal cost.

D) cost always equals average cost for network goods.

3. Aside from your skills and how hard you work, what does your marginal product of labor reflect?

A) your supply of labor

B) the productivity of everyone else in your economy

C) your chance of death on the job

D) nothing

4. Since its founding in 331 B.C.E., the city of Alexandria has been a center of trade for the Mediterranean countries, as well as the Middle Eastern countries. Part of this is due to geography but it is also due to the network effect. What is the source of the network effect?

A) Ships want the best harbor available.

B) there is a lot of contestability for ports.

C) there are economies of scale due to a concentration of trade.

D) merchants want to maximize trading opportunities.

5. Which of the following is NOT a feature of markets for network goods?

A) only one network good in each industry can exist at one time.

B) when networks are important, the “best” product may not always win.

C) competition in markets for network goods is “for the market” instead of “in the market.”

D) monopolies or oligopolies usually sell network goods.

Reference no: EM13801657

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