Use the Following Statements to Answer This Question

question 24

Multiple Choice

Use the following statements to answer this question:
I. A network externality is a situation in which each individual's demand depends on the purchases of other buyers.
II. Network externalities are mainly positive effects resulting from the actions of others, while ordinary externalities are mainly negative effects resulting from the actions of others.

• A) I and II are true.
• B) I is true and II is false.
• C) I is false and II is true.
• D) I and II are false.

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Definitions:

Profit-Maximizing

The strategic process used by businesses to determine the price and output level that generates the most profit.

Demand

The quantity of a good or service that consumers are willing and able to purchase at various prices during a specified period of time.

Long Run

A period in which all factors of production and costs are variable, allowing firms to adjust to meet changes in the market.

Industry Entry

The process of a new competitor or company beginning operations in a specific market or industry.