Suppose That There Are Two Goods, X and Y, That

question 145

Multiple Choice

Suppose that there are two goods, X and Y, that are competing for dominance in a market with network externalities. Furthermore, suppose that the market has chosen good X even though it is inferior to good Y and that the net benefits of switching from X to Y are $20 while the costs of switching are $30. If the market stays with good X, then __________________ has occurred. If the costs of switching were to fall to $15 and the market still stays with good X then ___________________________.

• A)no market failure; market failure has occurred.
• B)market failure; no market failure has occurred.
• C)no market failure; there will still be no market failure.
• D)market failure; there will still be market failure.

---

Definitions:

Body Fat

The portion of a person's body mass made up of fat tissues as compared to lean body mass.

Bins

In the context of histograms, bins are intervals used to divide the entire range of values into a series of intervals to count the number of values that fall into each interval.

Bimodal

A distribution with two different modes (peaks) where the data shows two prevalent values.

Skewed

A distribution that is not symmetrical, where the bulk of values are concentrated to one side of the mean.