Many Economists Do Not Believe That Network Externalities Lock Consumers

question 117

Multiple Choice

Many economists do not believe that network externalities lock consumers into the use of products that have technology inferior to other, similar products.These economists believe that

• A)consumers are always rational.
• B)in practice, the gains from using a superior technology exceed the losses consumers incur from switching costs.
• C)there is no good evidence that switching costs exist.
• D)the government will prevent products with inferior technology from being sold to consumers.

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Definitions:

Supply

The total amount of a product or service available for purchase at any given price level in a given market.

Market

A system where buyers and sellers interact to trade goods, services, and resources.

Productivity

The efficiency with which inputs, like labor and capital, are converted into outputs, typically measured as a ratio of output to input.

Percent

A part per hundred, a unit of measure used to express the fraction of a quantity relative to one hundred parts of the total.