15) Stephanie listens to punk rock because her friends do. This is A)
a positive sum game.

B) collusion.

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C) positive market feedback.
D) negative market feedback.

16) Sunil has decided not to purchase another can of Stosh because his
friends laughed at him the last time he purchased some. Stosh is no longer a
popular item. Sunil’s action is known as

A) price-leadership. B) negative-sum game.

C) positive market feedback.
D) negative market feedback.

17) Because all of his friends stopped exclusively wearing black
clothes, Doug wears anything but black clothes. This is known as

A) a negative sum game. B)

C) positive market feedback.
D) negative market feedback.


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19) In an industry with network effects and differentiated products,
it is possible for the industry to become an oligopoly if

A) they engage in a zero-sum
game. B) they use a price-leadership model.
C) they use a kinked
demand curve model.

D) a few firms reap most of
the sales gains resulting from positive market feedback.

20) The idea that if enough consumers cut back on their use of a
product it induces other consumers to do the same is referred to as

A) positive market

B) non-dynamic market
feedback. C) negative market feedback.

D) elicit market feedback.

21) People’s willingness to buy the PC or Mac format of computer
software depends on how popular the software format is among other consumers.
This is an example of

A) a cartel.

B) an opportunity cost. C) a
network effect.

D) the prisoners’ dilemma

22) Which of the following is NOT subject to a network effect?
A) the layout of the keys on your keyboard
B) rotating your tires every six months
C) using a fax machine

D) purchasing a new high-definition DVD player


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23) An example of a positive market feedback is A) the emergence of
the iPod.

B) routine
maintenance on a car.

C) the declining use of land-line telephones for long distance
calls. D) the use of telegraph services in the twenty-first century.

24) How can network effects lead an industry to become an oligopoly?

26.5 Product Compatibility in Multiproduct Oligopolies Facing
Network Effects

1) Product compatibility is
A) the capability of a product sold by one firm to compete with
another firm’s product.

B) the capability of a product sold by one firm to function together
with another firm’s complementary product.

C) the sensitivity of the price of one product is to the change of
the price of another product.
D) how much one product can be substituted for another product.

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