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Consider the market for CD players, illustrated in the figure to the right. Suppose there are network externalities in this market such that the quantity

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Consider the market for CD players, illustrated in the figure to the right. Suppose there are network externalities in this market such that the quantity of a good 200- demanded grows in response to the growth of purchases by other individuals (as 180- Doo indicated by the demand curve "Demand" in the figure). Suppose that the price is initially $90 where the quantity demanded is 120 (thousand CD players per month). 160- Demand If the price of CD players falls to $70, demand will increase to thousand CD players per month. (Enter your response using an integer.) Of this increase, thousand units of the 30 thousand-unit increase is the pure Price price effect and thousand units of the increase is the bandwagon effect. The bandwagon effect causes the demand for CD players to be more than would otherwise be the case (without network externalities). 0 20 40 60 80 100 120 140 160 180 200 220 CD Players (thousands per month)

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