A Network Effect Exists Whenever

question 82

Multiple Choice

A network effect exists whenever

• A) a firm's willingness to produce a particular good or service is influenced by the costs of inputs it must utilize in order to manufacture the item.
• B) a consumerʹs willingness to purchase a particular good or service is influenced by how many others also buy or have bought the item.
• C) a firm's willingness to purchase a particular factor of production depends on the other types of inputs it utilizes to manufacture an item.
• D) a consumer's willingness to purchase a particular good or service is influenced by the prices of other complementary or substitute items.

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Definitions:

Price

The total monetary value expected, obliged, or handed over in exchange for something.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price level in a specified period.

Table: Price Elasticity

A tabulated representation that shows how the quantity demanded of a good or service responds to changes in its price, indicating the sensitivity of consumers to price changes.

Midpoint Formula

A method used in economics and mathematics to calculate the average of two points on a line, often employed to find the elasticity of demand.