Question 1

If music is indeed a network good, the most popular musical groups:

Accepted Answer

A)  are always the best. 
B)  always have the most musical training. 
C)  do not have to worry about contestability of their popularity. 
D)  might not be the best. 
A)  are always the best. 
B)  always have the most musical training. 
C)  do not have to worry about contestability of their popularity. 
D)  might not be the best.

Question 2

Music is an example of a ________ good.

Accepted Answer

A)  network 
B)  played 
C)  reverse 
D)  mirrored 
A)  network 
B)  played 
C)  reverse 
D)  mirrored

Question 3

A network good is a good that people benefit ______ from as ______ people use it.

Accepted Answer

A)  more; fewer 
B)  more; more 
C)  less; more 
D)  the most; no other 
A)  more; fewer 
B)  more; more 
C)  less; more 
D)  the most; no other

Question 4

If you buy a lot of apps for your current iPad, and in a few years another device comes out that is superior to it, why might you upgrade to a newer iPad instead of switching?

Accepted Answer

A)  You don't want to pay to have your Apple tattoo removed. 
B)  You have invested in several apps for the iPad that you would have to repurchase for the new platform. 
C)  None of the same applications is available on the new platform. 
D)  You prefer the iPad's higher price. 
A)  You don't want to pay to have your Apple tattoo removed. 
B)  You have invested in several apps for the iPad that you would have to repurchase for the new platform. 
C)  None of the same applications is available on the new platform. 
D)  You prefer the iPad's higher price.

Question 5

Which statement about network goods is TRUE?

Accepted Answer

A)  They are goods that are usually sold by large firms with a great deal of market power 
B)  They are goods that tend to have a large number of users or consumers. 
C)  They are goods whose value to one consumer increases the greater the total number of consumers. 
D)  All of the answers are correct. 
A)  They are goods that are usually sold by large firms with a great deal of market power 
B)  They are goods that tend to have a large number of users or consumers. 
C)  They are goods whose value to one consumer increases the greater the total number of consumers. 
D)  All of the answers are correct.

Question 6

Loyalty plans offered by booksellers can be viewed as a form of:

Accepted Answer

A)  a public good because everyone benefits from its use. 
B)  contract manipulation, charging prices that mimic monopolies. 
C)  price discrimination, offering lower prices to people that are more price sensitive and higher prices to everyone else. 
D)  a price ceiling, creating an artificial shortage of top-selling books. 
A)  a public good because everyone benefits from its use. 
B)  contract manipulation, charging prices that mimic monopolies. 
C)  price discrimination, offering lower prices to people that are more price sensitive and higher prices to everyone else. 
D)  a price ceiling, creating an artificial shortage of top-selling books.

Question 7

Internet dating services such as Match.com are in a market dominated by several large firms, making the market a(n:)

Accepted Answer

A)  competitive market. 
B)  monopoly. 
C)  monopolistically competitive market. 
D)  oligopoly. 
A)  competitive market. 
B)  monopoly. 
C)  monopolistically competitive market. 
D)  oligopoly.

Question 8

Contestable markets tend to arise when:

Accepted Answer

A)  fixed costs are high. 
B)  the threat of new firms entering the market is low. 
C)  the incumbent firm does not control access to an important resource. 
D)  government regulations are in effect. 
A)  fixed costs are high. 
B)  the threat of new firms entering the market is low. 
C)  the incumbent firm does not control access to an important resource. 
D)  government regulations are in effect.

Question 9

The term "accidents of history" describes:

Accepted Answer

A)  actual equilibrium outcomes in a coordination game. 
B)  good equilibrium outcomes in a coordination game. 
C)  all equilibrium outcomes in a coordination game. 
D)  no equilibrium outcomes in a coordination game. 
A)  actual equilibrium outcomes in a coordination game. 
B)  good equilibrium outcomes in a coordination game. 
C)  all equilibrium outcomes in a coordination game. 
D)  no equilibrium outcomes in a coordination game.

Question 10

Which firm's market is the most contestable?

Accepted Answer

A)  the only cable TV provider in town 
B)  the only sewer-and-water company in town 
C)  the only hospital in town 
D)  the only Chinese restaurant in town 
A)  the only cable TV provider in town 
B)  the only sewer-and-water company in town 
C)  the only hospital in town 
D)  the only Chinese restaurant in town

Question 11

Since it is harder to get out of a marriage than a long-term relationship, getting married increases the switching costs for being in a relationship.

Accepted Answer

A) True 
 B)False

Question 12

Markets tend to be more easily monopolized when:

Accepted Answer

A)  marginal costs are low. 
B)  average costs are high. 
C)  the good is a network good. 
D)  fixed costs are high. 
A)  marginal costs are low. 
B)  average costs are high. 
C)  the good is a network good. 
D)  fixed costs are high.

Question 13

Facebook dominates as the premier social networking site with more than 500 million members. However, Google has recently released Google+, a social networking site that makes it easy to create circles of information just for your friends, parents, and professional life. The market for social networking is a(n):

Accepted Answer

A)  interworked market. 
B)  contestable market. 
C)  intracompetitive market 
D)  separating-equilibrium market. 
A)  interworked market. 
B)  contestable market. 
C)  intracompetitive market 
D)  separating-equilibrium market.

Question 14

Multiple products can thrive in a network industry when:

Accepted Answer

A)  the government decides to allow multiple products. 
B)  consumers don't care about coordination at all. 
C)  there are multiple niches to fill; each product can dominate one niche. 
D)  competitors all go after the same niche. 
A)  the government decides to allow multiple products. 
B)  consumers don't care about coordination at all. 
C)  there are multiple niches to fill; each product can dominate one niche. 
D)  competitors all go after the same niche.

Question 15

The most spoken language in the world is English with 1.8 billion speakers, but only 18% are native (by comparison, the next-most spoken language-standard Chinese-has 1.345 billion speakers and 63% are native). This relatively recent change has followed globalization. How does increased globalization explain why so many people choose to learn the same language as a second language?

Accepted Answer

A)  Globalization creates an incentive for people to learn other cultures. 
B)  Globalization began a standards war of languages; English won. 
C)  Globalization made it cheaper to learn new languages thanks to gains from trade. 
D)  Globalization expands the network of English speakers. 
A)  Globalization creates an incentive for people to learn other cultures. 
B)  Globalization began a standards war of languages; English won. 
C)  Globalization made it cheaper to learn new languages thanks to gains from trade. 
D)  Globalization expands the network of English speakers.

Question 16

Which condition is required for a network good to succeed over a better good in the market?

Accepted Answer

A)  The network good should have a minimal number of consumers so that customers are not competing for the same network. 
B)  The network good should have a much larger number of consumers or users than the better good. 
C)  The network good should be a free good. 
D)  All of these conditions are required. 
A)  The network good should have a minimal number of consumers so that customers are not competing for the same network. 
B)  The network good should have a much larger number of consumers or users than the better good. 
C)  The network good should be a free good. 
D)  All of these conditions are required.

Question 17

Antitrust laws forbidding "intent to monopolize" are problematic for network goods because:

Accepted Answer

A)  each firm just wants a small share of the market. 
B)  all firms are competing "for the market." They are all trying to monopolize. 
C)  consumers are made worse off by the contestability of markets for network goods. 
D)  consumers are better off when markets are not contestable. 
A)  each firm just wants a small share of the market. 
B)  all firms are competing "for the market." They are all trying to monopolize. 
C)  consumers are made worse off by the contestability of markets for network goods. 
D)  consumers are better off when markets are not contestable.

Question 18

Antitrust policy is difficult in the case of network goods because the relevant tradeoff is not one seller versus many sellers but one seller versus another seller.

Accepted Answer

A) True 
 B)False

Question 19

QWERTY is:

Accepted Answer

A)  a keyboard layout. 
B)  a type of software. 
C)  an Internet browser. 
D)  a digital phone. 
A)  a keyboard layout. 
B)  a type of software. 
C)  an Internet browser. 
D)  a digital phone.

Question 20

What is the difference between competition "for the market" and competition "in the market"?

Accepted Answer

Competition "for the market" is one mono

Exam 16: Competing for Monopoly

If music is indeed a network good, the most popular musical groups:

Music is an example of a ________ good.

A network good is a good that people benefit ______ from as ______ people use it.

If you buy a lot of apps for your current iPad, and in a few years another device comes out that is superior to it, why might you upgrade to a newer iPad instead of switching?

Which statement about network goods is TRUE?

Loyalty plans offered by booksellers can be viewed as a form of:

Internet dating services such as Match.com are in a market dominated by several large firms, making the market a(n:)

Contestable markets tend to arise when:

The term "accidents of history" describes:

Which firm's market is the most contestable?

Since it is harder to get out of a marriage than a long-term relationship, getting married increases the switching costs for being in a relationship.

Markets tend to be more easily monopolized when:

Multiple products can thrive in a network industry when:

Which condition is required for a network good to succeed over a better good in the market?

Antitrust laws forbidding "intent to monopolize" are problematic for network goods because:

Antitrust policy is difficult in the case of network goods because the relevant tradeoff is not one seller versus many sellers but one seller versus another seller.

QWERTY is:

What is the difference between competition "for the market" and competition "in the market"?

The Big Ideas

The Power of Trade and Comparative

Supply and Demand

Equilibrium

Elasticity and Its Applications

Taxes and Subsidies

The Price System

Price Ceilings and Floors

International Trade

Externalities- When the Price Is Not Right

Costs and Profit Maximization Under Competition

Competition and the Invisible Hand

Monopoly

Price Discrimination

Oligopoly and Game Theory

Monopolistic Competition and Advertising

Labor Markets

Public Goods and the Tragedy of the Commons

Political Economy and Public Choice

Economics, Ethics, and Public Policy

Managing Incentives

Stock Markets and Personal Finance

Price Discrimination

Consumer Choice

Filters

A network good is a good that people benefit from as people use it.