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14 -- Part 4: The Demand and Supply of Resources
Other technologies have gone through similar changes.
The number of users is what determines the Inter net, fax machines, and apps.
If you were the only person with the ability to send and receive a fax, your technical capacity wouldn't have much value.
The way for the next generation of users is paved by first adopters.
Customers may face significant costs if they leave a larger network.
Many users had to switch from listening to music on CDs to using digital music files.
There are different costs for different digital music options.
The cost of transferring music from one format to another makes it difficult for consumers to change.
The demand for the existing product becomes moreelastic when consumers face switch costs.
oligopolists try to make it harder to switch to another network by using the number of customers they maintain in their network.
Frequent fliers, hotel reward points, and credit cell phones are some of the perks that firms promote in order to increase loyalty.
The costs associated with future users are an excellent example of the costs of switch.
Smaller schools have a harder time raising funds than colleges and universities that have more alumni.
Alumni are more likely to hire people who went to the same school if they have a lot of alumni.
Penn State University has the largest alumni base.
Each graduate benefits from network externalities.
If it were larger, it wouldn't be able to make as many obscure titles available.
The network benefits from having more DVDs to choose from.
Each one will have to compete harder to get fresh bread if it attracts more customers.
Network externalities do not exist because the bakery's supply of bread is limited.
Many providers don't charge for calls inside the network or among a circle of friends.
If you don't switch, you will end up using more minutes on a rival network.
Many cell phone customers pay high switching costs because of these two tactics.
In 2003 the Federal Communications Commission began requiring phone companies to allow customers to take their cell phone numbers with them when they switch providers.
The cell phone market has been made more competitive by the change in the law.
Oligopolists are aware of the power of the network.
The first firm into an industry can often gain a large customer base.
Positive network externalities allow the firm to grow quickly.
Consumers are more comfortable buying from an established firm.
It is difficult for smaller competitors to gain customers because of the two factors.
The presence of positive network externalities causes small firms to be driven out of business or forced to merge with larger competitors.
When you hear about something new, you check it out.
There is no harm in doing that.
You have made an investment.
It depends on how many other people do the same thing.
The first people to get a 3D television.
The amount of 3D programming was very small.
Consumers who waited could buy a 3D unit with greater investment clarity.
This was true at a lower price, and more content was available to watch on all of the social networks.
That was a win for people who were late.
The early adopters were punished for paving the way.
Externalities are important on many social media sites.
Waiting for a site to gain traction will cause it to fail.
You can't set up a profile and invest time and money in this market if you find out that other people are on other sites.
Signing up for dozens of dating sites or simply choosing are more excited you about the features than you are about the features.
You end up wasting a lot of time because you don't get the biggest database because Match.com is the largest site.
Network benefits come from dating sites.
If you wait until a platform is established, you can be confident that your return on your investment will improve your odds of success.
The misconception was that cell phone companies compete like firms in competitive markets or monopolistically competitive markets.
The truth is that cell phone companies are monopolies.
Firms can collude to create monopoly conditions.
It's hard to predict the result.
oligopolistic firms are capable of cooperating to maximize their long- run profits, if the potential success of a tit- for- tat strategy is to be believed.
When more competition is present, society's welfare is higher because it mirrors the result found in monopolistic competition.
Each oligopolistic industry must be assessed on a case- by- case basis by examining data and using game theory because the market structure is not predictable.
One of the most fascinating parts of the theory of the firm is the study of oligopoly.
If the most beautiful woman in the bar was without a dance partner, each of the gentlemen would have an incentive to change their behavior.
When a small number of firms sell a differentiated product in a market with significant barriers to entry, there is a type of market structure called oligopoly.
An oligopolist is a competitor that sells differentiated products.
It is like a monopolist because it has a lot of barriers to entry.
Oligopolists have a tendency to collude in order to achieve monopoly-like profits.
marginal cost and price are not the same.
The result is somewhere between the competitive market and monopoly outcomes.
When cooperation is most likely to occur is determined by game theory.
Decision- makers have dominant strategies that lead them to be unwilling in many cases.
Firms compete with price or advertising when they can potentially earn more profit by curtailing these activities.
When games are played multiple times, they become more complicated.
When repeated interaction occurs, decision- makers fare better under the approach that maximizes the long- run profit.
Cases are hard to prosecute in antitrust law.
These laws are needed to give firms an incentive to compete.
Antitrust policy limits price discrimination, exclusive dealings, tying arrangements, mergers and acquisitions that limit competition and predatory pricing.
The quantity demanded is influenced by the number of customers who chase or use a good.
Small firms can go out of business if positive network externalities are present.
You can give reasons for your response.
Some places will only sell alcohol on Sunday if you can convince her to drink.
You answered after teaching a class on game theory.
The markets that are mentioned are tion.
The only way your economics instructor can ask a question is through the ing procedure.
You have to wake up again.
There is a student project.
If there are only two suppliers.
7 is the number of happiness.
There is a happiness quotient of 9.
Goods had to work 10 hours in order to be taxed so that they were graded A.
7 is the happiness quotient.
It's 4/10 for happiness.
Your grade is A, but you don't have restrictions.
The payoff matrix was used to determine the best policies for 15 hours.
It's 4/10 for happiness.
6 is the happiness quotient.
China gains a lot of happiness.
6 is the happiness quotient.
4,000 lowers trade barriers.
8,000 is considering entering the market.
Perfect Pies stays out of the market if you use the pay.
How will Perfect Pies enter the market if the questions are not answered below?
Two brands of coffee makers are competing for the convenience market.
When The Pizza Factory sets a high price that your roommate cannot sleep, the combined profit for both firms is high.
It won't take long for both countries to impose high tariffs.
Each country will make their roommate realize that she should set $25 billion.
The United States and China would benefit from the snooze button.
Your roommate doesn't want to lower trade barriers.
Each country would make $50 billion if the snooze button was used longer.
Staying in bed for as long as you want is not a dominant strategy in this tern.
The United States can't bring themselves to answer with paper because they can't impose high tariffs because they don't like Spock.
There are two theories that argue that oligopolists will form long- lasting cartels.
There is a demand curve and price leadership.
A group of oligopolists have set an output level and price to maximize economic profit.
When a rival raises lists have higher prices, the other firms all stand to benefit by keeping their prices the same in order to capture those customers who don't want to pay more.
The firm that raises its price will see a drop in sales.
Other firms in the industry will match the price decrease if any of the rivals attempt to lower the price.
The firm's price will not gain many new customers because of the price match policy.
Because a price drop by one firm will be met immediately by a price drop from all the competitors, no one firm will be able to attract many new customers.
This can happen at any price below the agreed price.
The firms' behavior creates a demand curve that is more elastic at higher prices and more inelastic at lower prices.
Each firm in the industry charges P and produces Q.
The marginal revenue curve is not constant because demand is elastic above P and less elastic below P. The gap is illustrated by a black vertical line.
More than one marginal cost curve intersects marginal revenue at output level Q because of the gap in marginal revenue.
The marginal cost curves MC1 and MC2 show this fact.
The demand curve can't explain how prices change.
The theory of price leadership gives some insight.
Demand is inelastic at prices below P.
The price leader sets the price and output level that maximizes its own profits.
Smaller firms set their prices to match the leader.
Because the smaller firms in the industry follow by setting their prices impact on price is small, it makes sense that smaller rivals match the price leader.
Price leadership isn't illegal because it doesn't involve colluding.
An effort to resist changes implemented by the price leader will lead to increased price competition and lower profits for every firm in the industry.
Pricing patterns in the airline industry are an example of price leadership.
On almost any route with multiple carrier options, a price search for flights will reveal the same prices on basic economy class flights.
Even though firms do not collude to set a profit- maximizing price, this similarity of prices happens.
The other carriers feel compelled to match the fare set by one firm.
Smaller rivals follow suit when the largest firm raises or lowers its price.
The parking garage charges $10 a day.
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