As more and more firms have acquired fax machines, the fax machine has become a standard means of business communication. The increase in demand for fax machines for business communication:

Question

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The increase in demand for fax machines for business communication is an example of a positive network externality, where the value of the product increases as the number of users of the product increases. Each additional firm that acquires a fax machine increases the value of the machines for all other firms that already have them, as they can send and receive faxes to and from more potential business partners.

As More and More Firms Have Acquired Fax Machines, the Fax