Which of the Following Reasons Motivated Facebook to Acquire Instagram

question 98

Multiple Choice

Which of the following reasons motivated Facebook to acquire Instagram, a photo and video-sharing social media site, for $1 billion?

• A) the desire to gain a new capability
• B) the need to enter a new geographical market
• C) the need to reduce its level of horizontal integration
• D) the desire to pursue an unrelated diversification strategy

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Definitions:

Network Externality

The effect that an additional user of a good or service has on the value of that product to others, often increasing the utility as more people use it.

Elastic

Refers to the responsiveness of the quantity demanded or supplied of a good to a change in its price.

Inelastic

Describes a situation where a change in the price of a good or service has a relatively small effect on the quantity demanded or supplied.

Network Externalities

The effect that the number or size of users of a product or service has on the value of that product or service to other users.