A classic example of network externalities, illustrating that the value of a product is a direct function of the number of users, is
A)fashion items.
B)the automobile.
C)the telephone.
D)public transport, such as the train.

Question

Quizplus · Accepted Answer

The telephone is a classic example of network externalities because its value increases as more people use it. The more people who have a telephone, the more valuable it becomes because there are more people to call and connect with. As the network of users grows, the value of the product increases. This leads to a positive feedback loop where more people join the network because it has become more valuable to them.

A Classic Example of Network Externalities, Illustrating That the Value