The External Benefit of an Additional Subscriber to a Network

question 153

True/False

The external benefit of an additional subscriber to a network is shown as the horizontal distance between the private demand curve and the social demand curve.

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Definitions:

Prime Costs

The direct costs of manufacturing an item, which typically include direct labor and direct materials.

Factory Overhead Costs

Costs incurred from running a manufacturing plant that cannot be directly associated with any particular product, such as utilities, depreciation, and maintenance expenses.

Direct Materials

Raw materials that can be directly traced to the production of a specific product and are a significant portion of the production cost.

Period Costs

Costs that are expensed in the period in which they are incurred, rather than being capitalized or included in the cost of goods sold, such as selling, general, and administrative expenses.