Figure 4.5.2
-A negative network externality causes demand to become:

Question

Quizplus · Accepted Answer

A negative network externality means that an increase in the number of users decreases the value of the good or service for each user. This leads to a decrease in demand, which is reflected in a shift in the demand curve to the left. As a result, the demand becomes less elastic as consumers become less responsive to changes in price due to the reduced value of the product for each user.

Figure 4.5.2 -A Negative Network Externality Causes Demand to Become