Network effects exist when the value of a product depends on the number of users.

Question

Quizplus · Accepted Answer

Network effects occur when a product's value increases as more people use it. For example, social media platforms like Facebook or Twitter have network effects because their value depends on the number of users on the platform. As more people join, the network becomes more valuable to everyone. Conversely, if few people use a product, its value may be low, regardless of its inherent quality.

Network Effects Exist When the Value of a Product Depends