The Goal of Finding Ways to Make Network Effects Work

question 57

Multiple Choice

The goal of finding ways to make network effects work in a company's favor and against competitors can be achieved by:

• A) taking the time to build a quality installed base for its standard after several tests and redesigns.
• B) making sure consumers remain hesitant to bear switching costs.
• C) focusing on a slow role out and moderating consumer demand.
• D) leveraging the positive feedback loop.
• E) relying on other industry members to establish a technological standard or format such that it becomes as quickly as possible as the industry standard.

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Definitions:

Absorption Costing

An approach to costing that encompasses all costs associated with manufacturing, including direct materials, direct labor, as well as variable and fixed manufacturing overheads, in the product cost.

Absorption Costing

A strategy in accounting practice that aggregates all manufacturing expenses, from direct materials and labor to variable and fixed overheads, into the determination of a product's cost.

Break-Even Sales

The amount of revenue required to cover both the variable and fixed costs of a business, indicating no profit and no loss.

Contribution Margin

The amount by which the sale of a product exceeds its variable costs, contributing to covering fixed costs and generating profit.