Network Externalities

question 82

Multiple Choice

Network externalities

• A)can only exist when there are economies of scale.
• B)prevent the dominance of a market by one firm.
• C)exist when the usefulness of a product increases with the number of consumers who use it.
• D)are created when celebrity endorsements of products lead to a surge in the demand for those products.

Understand the significance of intersegment transactions for segment reporting.

Apply the tests (revenue, profit or loss, assets) to determine which segments must be disclosed separately.

Recognize when additional segments must be disclosed to meet the 75 percent external revenue threshold.

Understand the considerations for identifying operating segments based on internal reporting structures.

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Definitions:

Communication Barrier

Any obstacle that impedes the exchange of information, thereby hindering effective communication.

Differing Perceptions

highlights the variation in how people interpret or give meaning to information or situations based on individual viewpoints.

Filtering

The process of selectively presenting information, often to manipulate perceptions or to reduce the volume of data to a more manageable level.

Communication Network

The structure and methods by which information is transmitted and received among members of an organization or social group.