The situation where one person's demand for a good depends on the consumption of the good by others is called a
A) network externality.
B) network internality.
C) consumption externality.
D) production externality.

Question

Quizplus · Accepted Answer

A network externality occurs when a person's demand for a good is affected by the value or utility that others derive from consuming the same good. Examples include social media platforms, where the more people use it, the more valuable it becomes to each individual user, or game consoles, where the availability of games and the ability to play online with others increases the utility of owning the console.

The Situation Where One Person's Demand for a Good Depends