The term "network externality" refers to a barrier to entry that exists because: A) the

The term "network externality" refers to a barrier to entry that exists because:

A)  the value of the product to a consumer depends on the number of consumers using the product.

B) a group of firms has divided the market into interconnected shares controlled by each firm.

C) several firms are able to network with each other and control the market.

D) consumers are unable to network, i.e., cooperate, with each other to control market price.

32) All of the following are cited as potential explanations for the decrease in demand for Kleenex-brand facial tissues except:

A) consumers switching to substitute products.

B) market entry by lower-priced private brands.

C) the failure of the producer of Kleenex tissues to develop any new and innovative products.

33) All of the following are measures of market power except the:

A) Lerner Index.

B) Minimum-Efficient Scale Index.

C) four-firm concentration ratio for an industry.

D) Herfindahl-Hirschman Index.

34) The Lerner Index is a measure of market power that focuses on:

A) the ratio of the price of a firm's product to the price elasticity of demand for the product.

B) the share of the market controlled by the X largest firms in the market.

C) the sum of the squares of the market share of each firm in an industry.

D) the difference between a firm's product price and its marginal costs of production.

35) Assume that for a particular firm's output price = $80, marginal cost = $30, average total cost = $25. Based on this information, the firm's Lerner Index is equal to:

A) 0.313.

B) 0.375.

C) 0.6.

D) 0.625.

36) Assume that for a particular firm's output price = $80, marginal cost = $30, average total cost = $25. This information suggests that the firm in question has:

A) no market power.

B) very little market power.

C) a fair degree of market power.

D) absolute market power.

37) When the cross price elasticity between good X and other related goods is positive and very low, firm X can be assumed to have:

A) minimal market power.

B) moderate market power.

C) a significant amount of market power.

D) virtually no market power.

38) The measure of market power that focuses on the share of the market controlled by the X largest firms in the market is known as:

A) the Lerner Index.

B) the Herfindahl-Hirschman Index.

C) the Minimum-Efficient Scale Index.

D) a concentration ratio.

39) All of the following are considered to be problems associated with the use of concentration ratios to measure market power except:

A) the market definitions used in their construction may be arbitrary.

B) two different markets with the same concentration ratio may have very different distributions of market share among firms used to calculate the concentration ratio.

C) consideration of exports and imports generally causes concentration ratios to be overstated.

D) concentration ratios are often based on national statistics and may not reflect substantial concentration in a market at a more localized level.

40) The Herfindahl-Hirschman Index is a measure of market power that focuses on:

A) the ratio of the price of a firm's product to the price elasticity of demand for the product.

B) the share of the market controlled by the X largest firms in the market.

C) the sum of the squares of the market share of each firm in an industry.

D) the difference between a firm's product price and its marginal costs of production.