(i) As you add friends on Facebook or Snapchat the value of your interactions increases. Thisis anexample of:

A) A supply economy of scale

B) Ademand economy of scale

C) A networkeffect

D) B &C

E) A & C

(ii) Consider the ratio of market capitalization to employees for platform firms. Compared to product firms, this ratio appears to be about an order of magnitude higher. The best explanation for this is:

A) The claim is false. The ratio of market capitalization to employees is barely any different between product and platform firms.

B) Platforms operate as "inverted" firms where 3rd party outsiders produce much of the value rather than internal employees, so platforms do not own the resources they use.

C) It's a bubble. Irrational exuberance on the part of investors has overvalued these firms and there will be a market correction like that of the housing bubble.

D) Demand economies of scale have produced giant vertically integrated firms that own a lot of assets.

E) Supply economies of scale have produced giant vertically integrated firms that own a lot of assets.