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Author Question: Network externalities refer to the situation where the usefulness of a product increases with the ... (Read 16 times)

joesmith1212

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on: Jun 29, 2018
Network externalities refer to the situation where the usefulness of a product increases with the number of consumers who use it.
 
  Indicate whether the statement is true or false

Question 2

Most economists are concerned about entry barriers. Why is this so important to them?
 
  What will be an ideal response?
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cegalasso

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

TRUE

Answer to Question 2

Entry barriers enable a firm to earn long-run profits. Furthermore, when there are entry barriers in a market, the industry output does not achieve allocative or productive efficiency, resulting in deadweight losses.


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