Although Some Economists Believe Network Externalities Are Important Barriers to Entry

question 224

Multiple Choice

Although some economists believe network externalities are important barriers to entry, other economists disagree because

• A)they believe that the dominant positions of firms that are supposedly due to network externalities are to a greater extent the result of the efficiency of firms in offering products that satisfy consumer preferences.
• B)they believe that most examples of network externalities are really barriers to entry caused by the control of a key resource.
• C)network externalities are really negative externalities.
• D)they believe that the dominant positions of firms that are supposedly due to network externalities are to a greater extent the result of economies of scale.

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Definitions:

Support Department Costs

The costs associated with functions that assist the direct production or service departments of an organization, such as maintenance and administration.

Overhead Rates

The ratio used to allocate indirect costs to products or services, typically based on a measure such as labor hours or machine hours.

Personnel Costs

Expenses related to the compensation and benefits of employees, including wages, salaries, bonuses, and fringe benefits.

Volume-based Cost Driver

A factor that causes the cost of an activity or resource to increase, directly related to the volume of production or service delivery.