9.9.10 econ

9.9.10 econ - externalities exist if the benefits are an...

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9.9.10 Economics Notes Market Allocation When price is set so that quantity supplied is greater than quantity demanded, there is a surplus When price is set so that the quantity supplied is less than quantity demanded, there is a shortage Primarily a surplus in America for agricultural goods. Normative term (should or should not be) Positive term (what is) Network Externality – Network externalities are the effects on a user of a product or service of others using the same or compatible products or services. Positive network
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Unformatted text preview: externalities exist if the benefits are an increasing function of the number of other users. Negative network externalities exist if the benefits are a decreasing function of the number of other users. Rather than charge a high market price who listen to music with their hands in their laps. Moving price closer to the market price does not generate the positive externality....
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This note was uploaded on 02/24/2011 for the course ECON 201 taught by Professor Williams during the Spring '08 term at UVA.

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