Positive Network Effects Are Often Viewed as a Two-Edged Sword

question 48

Multiple Choice

Positive network effects are often viewed as a two-edged sword for firms because they:

• A)increase the probability of higher market share,but make it easier to raise prices.
• B)increase the probability of lower market share,while making it easier to raise prices.
• C)increase the probability of higher market share,but limit the ability to raise prices.
• D)decrease the probability of higher market share,but make it easier to raise prices.

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Definitions:

Official Poverty Rate

A government-calculated statistic that measures the proportion of the population whose income falls below the threshold considered necessary to meet basic living needs.

Elderly Families

Families that consist predominantly of members who are of retirement age or older, often with specific medical, social, and financial needs.

Implicit Marginal Tax Rate

The rate at which additional income is effectively taxed due to the phase-out of benefits or allowances.

Government Transfers

Payments made by the government to individuals or other entities without expecting a good or service in return, such as social security or unemployment benefits.