What is the bandwagon effect?
A) a positive network externality where a consumer's demand for a product increases because no one else has it
B) a negative network externality where a consumer's demand for a product decreases because too many people own it
C) a negative network externality where a consumer's demand for a product decreases because of the "snob effect"
D) a positive network externality where a consumer's demand for a product increases because others own it

Question

Quizplus · Accepted Answer

The bandwagon effect refers to the phenomenon where the demand for a product increases as more people adopt it. This is a positive network externality, where a product becomes more valuable as more people use it. Therefore, the best choice is D, "a positive network externality where a consumer's demand for a product increases because others own it."

What Is the Bandwagon Effect