Week 2 (MC) PDF

**1. What is the main economic value of platforms?** A. Increasing transaction costs to make interactions exclusive. B. Reducing transaction costs between buyers and sellers. C. Removing intermediaries completely. D. Offering free services to all users. **Correct Answer**: B **2. How do platfo...

**1. What is the main economic value of platforms?** A. Increasing transaction costs to make interactions exclusive. B. Reducing transaction costs between buyers and sellers. C. Removing intermediaries completely. D. Offering free services to all users. **Correct Answer**: B **2. How do platforms reduce transaction costs?** A. By charging higher fees for premium users. B. By centralizing transactions into interactions instead of. C. By limiting the number of sellers on the platform. D. By removing the need for trust mechanisms. **Correct Answer**: B **3. What is the primary function of matchmaking in platforms?** A. Setting prices for transactions. B. Helping buyers and sellers find suitable partners. C. Building trust among platform users. D. Reducing platform fees for early adopters. **Correct Answer**: B **4. What distinguishes direct from indirect network effects?** A. Direct effects depend on the number of users, while indirect effects rely on complementary goods. B. Indirect effects occur only when trust mechanisms are in place. C. Direct effects focus on the money side of platforms. D. Indirect effects grow faster than direct effects. **Correct Answer**: A **5. What drives a Winner-Takes-All (WTA) market?** A. Negative feedback loops. B. Strong network effects creating dominance for one platform. C. Balanced competition among all platforms. D. Lack of exclusivity agreements. **Correct Answer**: B **6. What is the Penguin Effect in platform adoption?** A. Users hesitate to adopt early due to fear of failure or risk. B. Users flock to a platform when exclusivity agreements are offered. C. Platforms lose users if pricing strategies are unclear. D. Complementary goods fail to attract consumers. **Correct Answer**: A **7. What is a strategy to overcome the Chicken-and-Egg Problem?** A. Offer exclusivity deals to marquee users. B. Limit the number of users on one side of the platform. C. Increase transaction fees for initial users. D. Delay launching the platform until critical mass is achieved. **Correct Answer**: A **8. Why does a positive feedback loop occur in platforms?** A. Platforms add trust mechanisms for users. B. More users attract more users, amplifying network effects. C. Platforms limit access to exclusive features. D. User satisfaction decreases as competition increases. **Correct Answer**: B **9. How do platforms build trust?** A. By offering discounts to new users. B. By providing buyer protection and dispute resolution services. C. By limiting transactions to verified users only. D. By reducing the number of available sellers. **Correct Answer**: B **10. What is a drawback of pursuing both AMC and apps exclusivity intensely?** A. It decreases the value of exclusivity. B. It creates conflicting incentives for developers, lowering quality. C. It prevents developers from participating in non-platform markets. D. It reduces consumer expectations. **Correct Answer**: B **11. What does intermediate distinctive positioning lead to?** A. Clear market differentiation. B. Ambiguous positioning and reduced market share. C. Strong network effects for all users. D. Rapid platform growth. **Correct Answer**: B **12. What is the U-shaped relationship in platform positioning?** A. Performance is lowest at high and low distinctiveness. B. Performance is highest at intermediate distinctiveness. C. Performance is highest at low or high distinctiveness but lowest in the middle. D. Performance remains constant regardless of distinctiveness. **Correct Answer**: C **13. How can late entrants succeed in platform-based markets?** A. By copying the incumbent's platform exactly. B. By leveraging platform quality, indirect network effects, and consumer expectations. C. By limiting access to complementary goods. D. By pricing applications higher than the incumbent. **Correct Answer**: B **14. What are indirect network effects?** A. Consumers value direct links with other users. B. Users benefit from a larger variety of complementary goods or services. C. Network effects that decrease as platform size grows. D. Direct interactions between buyers and sellers. **Correct Answer**: B **15. What is an example of balancing AMC and exclusivity?** A. Google allowing open competition among developers but offering some exclusive features. B. A platform charging all users equally. C. Restricting access to all non-premium users. D. Prioritizing exclusivity over all other strategies. **Correct Answer**: A **16. What factor often drives the success of a Winner-Takes-All platform?** A. The platform's openness to competitors. B. Strong network effects and rapid adoption. C. High transaction fees for users. D. Minimal differentiation from competitors. **Correct Answer**: B **17. Why did Xbox succeed despite PlayStation 2's lead?** A. Xbox's platform quality and consumer expectations were stronger. B. PlayStation's exclusivity agreements were ineffective. C. Xbox reduced the cost of complementary goods to zero. D. PlayStation's market base was over-diversified. **Correct Answer**: A **18. What is the main function of market making on a platform?** A. Helping buyers and sellers find each other. B. Aggregating supply and demand while setting prices. C. Ensuring fair dispute resolution. D. Reducing search costs for early adopters. **Correct Answer**: B **19. What is a risk of intermediate positioning?** A. Attracting a niche audience. B. Confusing consumers and developers, leading to underperformance. C. Overemphasizing trust mechanisms. D. Excessive focus on complementary goods. **Correct Answer**: B **20. What makes platform ecosystems unique?** A. Platforms act as simple intermediaries. B. Platforms leverage network effects and manage multi-sided markets. C. Platforms require fewer users to function. D. Platforms operate without complementary goods. **Correct Answer**: B **21. Why do platforms grow exponentially?** A. They reduce transaction costs for users. B. They charge premium fees to new adopters. C. They limit access to exclusive goods. D. They encourage user participation through network effects. **Correct Answer**: D **22. Why are consumer expectations critical for new entrants?** A. They determine future consumer satisfaction. B. They shape adoption by influencing beliefs about the platform's success. C. They have no measurable impact on entry. D. They reduce switching costs for users. **Correct Answer**: B **23. What is the AMC strategy's primary benefit?** A. Promotes application variety and increases user adoption. B. Ensures exclusivity for key applications. C. Reduces the need for network effects. D. Limits developer competition on the platform. **Correct Answer**: A **24. What is the role of exclusivity in platforms?** A. It reduces competition among application providers. B. It ensures high-quality, unique offerings for users. C. It eliminates the need for network effects. D. It discourages niche developers from participating. **Correct Answer**: B **25. What can disrupt the Winner-Takes-All dynamic?** A. The absence of exclusivity agreements. B. Late entrants offering better quality and aligning with consumer expectations. C. The incumbent's reliance on direct network effects only. D. Reduced transaction costs on the incumbent platform. **Correct Answer**: B **26. Why do platforms subsidize one side of the market?** A. To attract developers to other platforms. B. To solve the Chicken-and-Egg Problem by building critical mass. C. To reduce transaction costs for consumers. D. To increase the switching costs for users. **Correct Answer**: B **27. What drives distinctive positioning in platforms?** A. Broad focus on all market niches. B. A unique identity appealing to targeted groups. C. Low focus on indirect network effects. D. Intermediate positioning across multiple markets. **Correct Answer**: B **28. How do platforms achieve trust-building?** A. By limiting user interactions to verified accounts. B. By providing mechanisms like reviews and dispute resolution. C. By offering discounts to repeat users. D. By enforcing strict exclusivity policies. **Correct Answer**: B **29. What factor determines platform success in dense markets?** A. The total transaction fees collected. B. The speed at which critical mass is achieved. C. The platform's ability to differentiate itself from competitors. D. The platform's reliance on indirect network effects. **Correct Answer**: C **30. Why is balancing strategies like AMC and exclusivity challenging?** A. It leads to ambiguous platform identity. B. Developers face conflicting incentives, reducing overall application quality. C. It discourages consumers from participating in indirect network effects. D. Exclusivity agreements are inherently unprofitable. **Correct Answer**: B