Consider the market for a particular brand of watch, illustrated in the figure to the right. Suppose there are network externalities in this market such that the quantity of the good demanded falls in response to the growth of purchases by other individuals (as indicated by the demand curve "Demand" in the figure). Suppose that the price is initially $14,000 where the quantity demanded is 60 watches per month. 18000- 16000- 14000- E3 12000- If the price of this brand of watch falls to $10,000, demand will increase to watches. (Enter your response using an integer.) However, without negative network externalities, demand would have increased by ☐ units, which is the pure price effect, meaning the size of the snob effect is (Enter your responses using integers.) The snob effect causes the demand for watches to be more than would otherwise be the case (without network externalities). 10000- 8000- 6000- 4000- 2000- Derab 0+ 0 20 40 60 80 100 120 140 160 Watches (per month) 80
Consider the market for a particular brand of watch, illustrated in the figure to the right. Suppose there are network externalities in this market such that the quantity of the good demanded falls in response to the growth of purchases by other individuals (as indicated by the demand curve "Demand" in the figure). Suppose that the price is initially $14,000 where the quantity demanded is 60 watches per month. 18000- 16000- 14000- E3 12000- If the price of this brand of watch falls to $10,000, demand will increase to watches. (Enter your response using an integer.) However, without negative network externalities, demand would have increased by ☐ units, which is the pure price effect, meaning the size of the snob effect is (Enter your responses using integers.) The snob effect causes the demand for watches to be more than would otherwise be the case (without network externalities). 10000- 8000- 6000- 4000- 2000- Derab 0+ 0 20 40 60 80 100 120 140 160 Watches (per month) 80
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