Exam 34: Information Technology

Economic theory suggests that the existence of a used-book market lowers the profits of publishers below what they would be if every reader had to buy a new copy.

If the demand curve for the DoorKnobs operating system is related to perceived market share s and actual market share t by the equation p = 147s(1 - x), then in the long run, the highest price at which DoorKnobs would maintain a market share of would be

List three examples of products for which there are significant network externalities. Explain why you believe network externalities are present in each case.

Our old friend Edmund Stench from Chapter 2 has now grown up and is in the business of producing punk rock DVDs. He must choose between selling his DVDs to final consumers, or selling his DVDs to firms that will rent them to the public. Which of the following factors would make rentals more attractive than sales?