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Author Question: As more people started using smart phones, the number of smart phone applications available rose, ... (Read 148 times)

anshika

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on: Jun 29, 2018
As more people started using smart phones, the number of smart phone applications available rose, increasing the smart phone's value to those who already owned one. This is an example of a(n) ________.
 
  A) pecuniary externality
  B) network externality
  C) moral hazard
  D) adverse selection

Question 2

What is the economic variable that guides the invisible hand?
 
  What will be an ideal response?


irishcancer18

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Reply #1 on: Jun 29, 2018
Answer to Question 1

B

Answer to Question 2

The invisible hand is guided by the market price. Market prices act as the most important piece of information, leading the right buyers to buy and the right sellers to sell; no more, no less. It ensures that self-interest and social interest are perfectly aligned. It also allows economic agents to make optimal decisions.


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