The short-run supply curve for a network good is horizontal because it is limited to the capacity of a firm's fixed investment.

Question

Quizplus · Accepted Answer

The short-run supply curve for a network good is typically not horizontal; it can slope upwards or have different shapes depending on the cost of adding additional users and the network effects. A horizontal supply curve suggests perfect elasticity, which is not characteristic of network goods where the value and costs can change with the number of users.

The Short-Run Supply Curve for a Network Good Is Horizontal