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Happely is a global online marketplace that connects designers with companies who need graphic design work for their projects

Economics

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Happely is a global online marketplace that connects designers with companies who need graphic design work for their projects. Companies often need a custom design that is high quality and don’t want to go to a high-end creative agency to get their needs met. Companies join the platform to hire graphic designers, and graphic designers join the platform to be hired for projects. A company writes a design brief explaining the help that it needs and the specific deliverable needed. Happely provides a search tool to search for designers by their skill sets (e.g., logo design vs. T-shirt design).

Juanita Cortéz, graphic designer, joined Happely a year ago because she wanted to build her portfolio of projects. She can list herself in the directory for free and use the profile feature to show off some of her work to prospective interested companies.

Stocky is a sock company that needs a fun, new graphic for the toes of its new socks. Stocky decided it would have a lot of projects in the near future and paid the membership fee to be able to access the platform and search function. Stocky turned to Happely’s search tool to find designers who are highly rated in creating graphics for clothing. They found Juanita Cortéz, who has done graphic design projects for many companies, according to her profile. Stocky negotiated a fee with Juanita, she designed the sock graphic, and Stocky paid her. Stocky sells its socks to its consumers months later on its own website after the manufacturing process is done.  

Within the Happely marketplace, who represents the buyer side, and who represents the seller side?

1. Happely is the seller; Juanita is the buyer

2. Stocky is the seller; the sock consumers are the buyers

3. Juanita is the buyer; Stocky is the seller

4. Stocky is the buyer; Juanita is the seller

Which side does Happely currently subsidize?

1. Happely does not subsidize either side

2. Happely subsidizes both sides

3. Happely subsidizes the buyer side

4. Happely subsidizes the seller side

Companies like Stocky join Happely because there are many talented graphic designers on Happely’s site. This is an example of:

1. Positive externality

2. Negative externality

3. Cross-side network effects

4. Same-side network effects

Happely provides a messaging service through its platform. The hiring company and graphic designer must negotiate their price and communicate about the project through the provided messaging service. The contact information of the company and the designer are not divulged to each other; and if they communicate off-platform, Happely will not arbitrate any disagreements between the two parties. This is an example of:

1. Network effects

2. Governance

3. Corporate social responsibility

4. Same-side network effects

Companies like Happely have contributed to the rise of the “gig economy”— an existing market system in which companies hire independent contract workers for short-term projects. To attract business, artists and designers post examples of their work on the platform. Which of the following is an example of an externality relevant to the gig economy?

1. When browsing other artists’ profiles, Angela (another graphic designer) sees Juanita’s designs for socks and misappropriates them for work she is doing on gloves.

2. Due to the rise of popularity for Happely in India, a majority of students at the College of Art in New Delhi start to join the Happely network.

3. Revenue per company increases in the United States over the next year.

4. There is a rise in the number of workers who have sufficient work experience.

Xbox sells videogaming consoles to end consumers. Xbox charges gaming developers, such as Electronic Arts, very high fees to create games to be played on its Xbox console.  

Why does Xbox charge such high prices to companies who develop games for its console?

1. Xbox is a monopoly and so can charge high prices

2. To ensure only high-quality games are provided for their consoles

3. So it can reach customers with a lower willingness to pay

4. So it can charge a higher cost for their consoles to consumer

1. Xbox sells its console below cost and also decreases the cost of the console over time. Why does Xbox subsidize the consumer (for the console) and not the developer of the games?  

   1. Xbox needs a high number of players in order to attract good developers to create a variety of games for its console.

   2. Because gamers are younger and have less disposable income

   3. Because the gaming consumer’s demand for Xbox games is inelastic

   4. Because Xbox does not have the R&D to develop its own games

In addition to its console, Xbox also provides an internal social network for gamers so that they can play online against other players. When this network was first launched, all players were matched randomly; and often novice players were matched with expert-level players. This resulted in novice players not being able to improve (because they were always getting defeated) and expert-level players getting bored (because they weren’t being challenged). This resulted in less engagement than expected.  

The scenario above is not an example of:

1. A decrease in same side network effects

2. Creating rather than addressing a negative externality

3. A decrease in cross-side network effects

4. A weak social network

Expert gamers' boredom is an example of a negative same-side network effect. (True or False)

Over time, fewer gamers joined and developers were less willing to develop games. This is an example of a same-side network effect. (Ture or False)

Xbox started tracking the scores of players and used machine learning to segment them into player levels. This is an example of increasing positive cross-side network effects. (Ture or False)

Super Mario Maker is a game hosted on the Nintendo Online platform where gamers can create and add their own levels to other Mario-centered games that they own. Over 10 million levels have been shared, and each level is rated by gamers (easy, normal, expert, and super expert). The platform also uses an algorithm to recommend specific levels that players would enjoy.

This is an example of:  

1. Explicit Network Effect

2. Implicit Network Effect

3. Cross-side Network Effect

4. A Positive Externality

In some games players can create “skins” that allow their avatars to appear as a different character. These skins can be traded with other players and even sold in a marketplace supported by the gaming platform. This co-creation adds to the fun of the game and draws in more users.

This is an example of:  

1. Explicit Network Effect

2. Implicit Network Effect

3. Cross-side Network Effect

4. A Positive Externality