When does a network externality exist?
A) when advertising has an impact on the number of people purchasing a good.
B) when a change in the price of a good influences the quantity demanded.
C) when the number of people purchasing a good impacts the supply curve
D) when the number of people purchasing a good influences quantity demanded

Question

Quizplus · Accepted Answer

Network externalities exist when the value of a product or service increases as more people use it, directly influencing the quantity demanded. This is because the utility a user derives from a product or service increases with the number of other users.

When Does a Network Externality Exist