If a firm experiences decreases in the per-unit costs of production as its network increases, then this firm is experiencing
A) economies of scope.
B) economies of scale.
C) network externalities.
D) differentiation.
QUESTION 2Increasing returns
A) causes marginal cost to remain constant.
B) causes marginal cost to rise.
C) causes marginal cost to fall.
D) causes marginal product to rise but then fall.
QUESTION 3Being first only works
A) if accounting profits are earned in the first year.
B) if the entrepreneur has the working capital of a large firm.
C) in a winner take all situation.
D) all of these choices.
QUESTION 4If a firm has large start-up costs and nearly zero marginal costs
A) the firm can profit by focusing on total cost.
B) the firm cannot profit competing on marginal cost.
C) the firm can make money by simply charging a price.
D) the firm can profit competing on marginal cost.
QUESTION 5Government picking winners
A) is the market model.
B) is the central planning model.
C) can be done with really good data.
D) none of these choices.
QUESTION 6Dominant firms tend to lag in innovation because
A) of the sunk cost effect.
B) entrepreneurs are found in smaller firms.
C) they are usually focused on market share.
D) all of these choices.
QUESTION 7If a seller incurs an obligation to generate an ancillary obligation of a certain value to offset the initial buyer's capital expenditure, then there is a(n) ____ in place.
A) spot contract
B) buyback contract
C) offset contract
D) enforceable contract
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