Unlike positive externalities from physical goods, network externalities affect: A) existing and potential users. B) only potential users. C) only existing users. D) existing firms. Which statement would describe a network effect? A) A Black Friday sale encourages you to buy a new TV. B) Your workout partner cancels her gym membership, so you end up doing so as well. C) You use your holiday bonus to pay off bills. D) A parade comes through town, disrupting traffic all afternoon. 38. As more people rely on a travel app to book reservations, the quality of the app improves, encouraging more people to use the app. This type of network is best described as a network. A) physical B) virtual C) external D) internal 39. During the upward sloping part of a network good demand curve, which type of customer is likely to drive the sale of the good? A) core user B) casual user C) late adapter D) market leader (EL Alphabet Inc. (Google) reported the following disclosure in a recent Form 10-Q. For ads placed on Google Network Members' properties, we evaluate whether we are the principal (i.e., report revenues on a gross basis) or agent (i.e., report revenues on a net basis). Generally, we report advertising revenues for ads placed on Google Network Members' properties on a gross basis, that is, the amounts billed to our customers are recorded as revenues, and amounts paid to publishers are recorded as cost of revenues. We are the principal because we control the advertising inventory before it is transferred to our customers. Our control is evidenced by our sole ability to monetize the advertising inventory, being primarily responsible to our customers, having discretion in establishing pricing, or a combination of these. As it relates to Google's other revenues, the most significant judgment is determining whether we are the principal or agent for app sales and in-app purchases through the Google Play store. We report revenues from these transactions on a net basis because our performance obligation is to facilitate a transaction between app developers and end users, for which we earn a commission. Consequently, the portion of the gross amount billed to end users that is remitted to app developers is not reflected as revenues. a. Does Google report the following transactions at gross or net (revenue)? 1. Sales revenue: App sales 2. Sales revenue: In-app customer purchases through Google Play store 3. Advertising revenue: ads placed on Google Network Member's properties b. What accounting guidance did Google use to determine whether to record revenue at net or at gross? c. Assume Google's App sales (net) were $3 million based on a 10% commission on each transaction. What is the gross amount billed to the end users? What amount of revenue is recorded in the financial statements of Google? $