Because the Supply of a Fixed Factor Is Vertical

question 121

Multiple Choice

Because the supply of a fixed factor is vertical,

• A)the owners of the factor will accept all prices above zero.
• B)only the supply of the factor matters for setting price
• C)only the demand for the factor matters in setting the price.
• D)the price will be set where the quantity supplied of the factor equals the quantity demanded.

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Definitions:

Network Effects

The phenomenon whereby increased numbers of people or participants improve the value of a good or service.

Simultaneous Consumption

A situation where a good or service can be consumed by more than one individual at the same time without reducing the quantity available to others.

Monopoly Power

The ability of a monopoly to set or influence prices within the market due to the lack of competitive pressures.

Net Social Benefits

The total benefits from an action or policy minus the total costs, considering both direct and indirect effects on society.